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The Fairy Tale of Low Inflation in the Euro Area

  • Martin Hochstein EMAIL logo
Veröffentlicht/Copyright: 29. September 2018
The Economists’ Voice
Aus der Zeitschrift The Economists’ Voice Band 15 Heft 1

Abstract

There are strong indications that actual consumer inflation in the euro area is understated by official price measures. The exclusion of homeowner shelter costs and inadequate quality adjustments for certain basket items are among the reasons for a potential downward bias in Eurostat's Harmonised Index of Consumer Prices, which would have widespread ramifications not only for consumers but also for the broader economy and financial markets. By focusing on the HICP as a yardstick for its primary objective of medium-term price stability, the European Central Bank relies on a too narrowly defined and error-prone inflation concept.

Keywords: Downward inflation bias; HICP; Hidden inflation; Inflation mismeasurement; Owner-occupied housing costs

References

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Published Online: 2018-09-29

©2018 Walter de Gruyter GmbH, Berlin/Boston

Artikel in diesem Heft

  1. Editorial
  2. The European Monetary Union on a Bumpy Road – Challenges and Solutions for an Uncertain Future
  3. Policy Papers
  4. Core-Periphery Relations in the Eurozone
  5. Monetary Integration, Fiscal Divergence and Current Account Imbalances in Europe
  6. Secular Stagnation, Unemployment Hysteresis and Monetary Policy in EMU: Scratches but Not Scars?
  7. An Evolutionary Path Towards a European Monetary Fund
  8. How to Leave the Eurozone: The Case of Finland
  9. Policy Forum
  10. Solidarity and Responsibility in the Euro Area: Foes or Friends?
  11. The European Central Bank, Italy and the Next Eurozone Crisis
  12. Beyond Risk Sharing and Risk Reduction
  13. How Europe should Overcome the Coming Deadlock
  14. “Strengthen Stability: Further Development of the ESM in a Deepened Monetary Union”
  15. Poland’s Euro Adoption Perspectives
  16. The Fairy Tale of Low Inflation in the Euro Area
  17. On the Accuracy of Estimating the Inflation Rate: Marty Feldstein as Dr. Pangloss
  18. Other Papers
  19. The Unbearable Errorlessness of Global Poverty Estimates
  20. Property Rights on Credit and State Control of Money: The Irrelevance of the Origin of Money
https://doi.org/10.1515/ev-2018-0025
Schlagwörter für diesen Artikel
Downward inflation bias; HICP; Hidden inflation; Inflation mismeasurement; Owner-occupied housing costs

Artikel in diesem Heft

  1. Editorial
  2. The European Monetary Union on a Bumpy Road – Challenges and Solutions for an Uncertain Future
  3. Policy Papers
  4. Core-Periphery Relations in the Eurozone
  5. Monetary Integration, Fiscal Divergence and Current Account Imbalances in Europe
  6. Secular Stagnation, Unemployment Hysteresis and Monetary Policy in EMU: Scratches but Not Scars?
  7. An Evolutionary Path Towards a European Monetary Fund
  8. How to Leave the Eurozone: The Case of Finland
  9. Policy Forum
  10. Solidarity and Responsibility in the Euro Area: Foes or Friends?
  11. The European Central Bank, Italy and the Next Eurozone Crisis
  12. Beyond Risk Sharing and Risk Reduction
  13. How Europe should Overcome the Coming Deadlock
  14. “Strengthen Stability: Further Development of the ESM in a Deepened Monetary Union”
  15. Poland’s Euro Adoption Perspectives
  16. The Fairy Tale of Low Inflation in the Euro Area
  17. On the Accuracy of Estimating the Inflation Rate: Marty Feldstein as Dr. Pangloss
  18. Other Papers
  19. The Unbearable Errorlessness of Global Poverty Estimates
  20. Property Rights on Credit and State Control of Money: The Irrelevance of the Origin of Money
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