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MNI BRIEF: Optimal EZ Price Target May Vary By Region -Study

France, Germany, and Italy need significantly positive, albeit very different, target rates of inflation to minimise the economic welfare costs of distorted relative prices and increases in average mark-ups, a working paper published Tuesday by the European Central Bank concludes.

A range of 1.1%- 2.1% in France, 1.2%-2.0% in Germany, 0.8%-1.0% in Italy bests aligns prices with their efficient values, Klaus Adam, Erwan Gautier, Sergio Santoro and Henning Weber argue, in the study that appears shortly after the ECB formally adopted a symmetric 2% inflation target.

MNI London Bureau | +44 20 3983 7894 | luke.heighton@marketnews.com
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MNI London Bureau | +44 20 3983 7894 | luke.heighton@marketnews.com
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