DeutschClear Cookie - decide language by browser settings
Reutter, Michael; Sinn, Hans-Werner (2000): The Minimum Inflation Rate for Euroland. CESifo Working Paper, 377
Full text not available from 'Open Access LMU'.


As a result of the Balassa effect relative prices change rapidly between and within the euro countries. Thus it is impossible to find a common monetary policy that will result in price stability in all countries. Based on empirical estimates of the Balassa model, the paper calculates a minimum aggregate inflation rate which is compatible with the requirement that no country face a deflation. This minimum aggeragate inflation rate is 0.94\% in the euro-11 countries and 1.13\% in an extended Europe which incorporates the east European countries.