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Euro Area Inflation--When the Rubber hits the Road
The adjustment in the periphery of Europe has two dimensions. The first, which has dominated developments, was prices. One way to boost competitiveness is for euro area member to have lower inflation than Germany. The second involved the real economy and structural reforms raise the potential growth rates. The former appears nearly exhausted, while the latter risks the already fragile social support. The two Great Graphics posted here come from Brugel. The first is a look at the Big Mac Index over recent years for a select group of euro area countries. With a notable exception of Greece, there were no significant ... (full story)