| The first manuscript proposes a new core inflation indicator for the euro area, which is obtained by 'cleaning' month on month price changes from short-run volatility, idiosyncratic dynamics and measurement errors. We use a factor model to "project" monthly inflation on a large panel of time series.;The second manuscript proposes an alternative concept of core inflation, starting from a different framework. In this chapter we propose an approach to build a measure of core inflation that aims at overcoming those drawbacks. Our measure is derived on the basis of a criterion that explicitly treats core inflation as a wholly artificial concept whose usefulness rests only with its been helpful to defuse inflationary pressures that may be in the pipeline. Accordingly, our measure of core inflation is built on the basis of the solution of a standard monetary policy optimisation problem.;The third manuscript presents unique descriptive evidence on the patterns of price setting at the retail level in the euro area, and, when possible, compares it to the one available for the US. A set of stylized facts on the frequency and size of price changes is presented along with an econometric investigation of their main determinants. Moreover, the frequency and the size of price changes in the euro area is found to be related to a number of factors, in particular the average and the standard-deviation of product specific inflation, the structure of the distribution sector, the use of attractive prices as well as national particularities in the way prices are collected by statistical institutes. (Abstract shortened by UMI.). |
