Euro introduction leads to increased inflation uncertainty in European countries.
The article investigates the relationship between inflation and inflation uncertainty in twelve European countries. The researchers used a model to analyze how the introduction of the Euro in 1999 affected this relationship. They found that while steady-state inflation remained stable in most countries, inflation uncertainty and persistence increased. The link between inflation and inflation uncertainty broke down in many countries, suggesting that the European Central Bank may not have been as successful in controlling inflation as previously thought.