Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/52675 
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dc.contributor.authorFröhling, Annetteen
dc.contributor.authorLommatzsch, Kirstenen
dc.date.accessioned2011-12-08-
dc.date.accessioned2011-12-09T12:28:47Z-
dc.date.available2011-12-09T12:28:47Z-
dc.date.issued2011-
dc.identifier.isbn978-3-86558-759-6en
dc.identifier.urihttp://hdl.handle.net/10419/52675-
dc.description.abstractWe investigate output sensitivity of inflation in the euro area through a disaggregated analysis using price indices at the COICOP 4-digit level and compare cyclical sensitivity of a newly created index of cyclically sensitive items (ICSP) with that of headline HICP and core price indices. We also relate the ICSP to the first common factor extracted from the disaggregated prices, which best reflects the common dynamics of the underlying price indices. Our results indicate that two thirds of the items in the euro area HICP are cyclically sensitive. Categories most robustly related to the business cycle are food items (processed and unprocessed), non-durable industrial goods and services related to recreation. Output sensitivity of the ICSP is significantly higher than that of headline inflation. The difference in output sensitivity is most striking between the ICSP and core inflation because of the rather strong cyclical sensitivity of processed and unprocessed food prices (both in prevalence and the estimated parameter of output sensitivity). The index of cyclically sensitive prices is highly correlated with the first common factor. Given the weak factor structure of disaggregated prices, however, we conclude that the domestic business cycle is an important determinant of inflation but it is only one among a number of nearly equally important factors.en
dc.language.isoengen
dc.publisher|aDeutsche Bundesbank |cFrankfurt a. M.en
dc.relation.ispartofseries|aDiscussion Paper Series 1 |x2011,25en
dc.subject.jelE31en
dc.subject.ddc330en
dc.subject.keywordOutput sensitivityen
dc.subject.keywordinflationen
dc.subject.keyworddisaggregated price indicesen
dc.subject.keywordheterogeneityen
dc.subject.keywordeuro areaen
dc.subject.keywordfactor analysisen
dc.titleOutput sensitivity of inflation in the euro area: Indirect evidence from disaggregated consumer prices-
dc.typeWorking Paperen
dc.identifier.ppn679412409en
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungenen
dc.identifier.repecRePEc:zbw:bubdp1:201125en

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