A1240
Title: Inflation convergence in the EMU and the link between inflation differentials and their uncertainty
Authors: Menelaos Karanasos - Brunel University (United Kingdom)
Panagiotis Koutroumpis - Queen Mary University London (United Kingdom) [presenting]
Yiannis Karavias - University of Nottingham (United Kingdom)
Abstract: The aim is to provide evidence over the behavior of European inflation rates covering a period from 1980Q1 to 2013Q4. By applying univariate unit root and stationarity tests we show that convergence occured before the implementation of the common currency in 1999. Moreover, the influence of exchange rate mechanism can be attributed as positive since it stimulated the convergence process. For the high inflation countries deviations from the ERM policies led to higher inflation rates that were above the average.
