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Did the introduction of the euro impact on inflation uncertainty? - An empirical assessment

Author(s): Matthias Hartmann and Helmut Herwartz, Christian-Albrechts-University Kiel

Did the introduction of the euro impact on inflation uncertainty? - An empirical assessmentpdf(443 kB) Choose translations of the previous link 

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We study the impact of the introduction of the European Monetary Union on inflation uncertainty.

Two groups of economies, one consisting of three European Union members which are not part of the EMU and one of six OECD member economies, are used as control groups to contrast the effects of monetary unification against the counterfactual of keeping the status quo.

We find that the monetary unification provides a significant payoff in terms of lower inflation uncertainty in comparison with the OECD. Regarding the difficulty of quantifying the latent inflation uncertainty, results are found to be robust over a set of four alternative estimates of inflation risk processes.

(European Economy. Economic Papers. 396. December 2009. Brussels. PDF. 44pp. Free.)

KC-AI-09-396-EN-C (online)
ISBN 978-92-79-14396-5 (online)
ISSN 1725-3187

JEL classification: C53, E31, E42

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