{
  "title": "The Maastricht Inflation Criterion: How Unpleasant Is Purgatory?",
  "publication": "IMF Working Papers, June 1, 2006",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2016/12/31/the-maastricht-inflation-criterion-how-unpleasant-is-purgatory-19245",
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  "summary": "The Maastricht inflation criterion, designed in the early 1990s to bring \"high-inflation\" EU countries in line with \"low-inflation\" countries prior to the introduction of the euro, poses challenges for both new EU member countries and the European Central Bank.",
  "sections": [
    {
      "heading": "Summary findings",
      "content": "- The Maastricht inflation criterion was designed in the early 1990s to align \"high-inflation\" EU countries with \"low-inflation\" countries prior to the introduction of the euro.\n- The criterion has positively influenced the public stance toward low inflation.\n- The criterion has biased the choice of the disinflation strategy toward short-run, fiat measures—rather than adopting structural reforms with longer-term benefits.\n- This bias has \"unpleasant consequences for the efficiency of the eurozone transmission mechanism.\"\n- The criterion is unnecessarily tight for new member countries because it \"mainly reflects cyclical developments.\""
    },
    {
      "heading": "Policy analysis and implications",
      "content": "- Short-run, fiat disinflation measures have been favored over structural reforms, implying potential long-term costs for eurozone monetary transmission and efficiency.\n- For new EU member countries, the tightness of the criterion may impose undue constraints given the cyclical nature of the inflation signals it captures.\n- The trade-off highlighted suggests a need to reassess the criterion’s calibration or its application to new members to avoid discouraging structural reforms that yield longer-term benefits.\n\n---\n\n Content in this bundle\n\n- wp06154\n  - wp06154 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - wp06154 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2016/12/31/the-maastricht-inflation-criterion-how-unpleasant-is-purgatory-19245"
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    "Authors: Aleš Bulíř, Jaromír Hurník",
    "Published: June 1, 2006",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781451864144.001",
    "The Maastricht inflation criterion was designed in the early 1990s to align \"high-inflation\" EU countries with \"low-inflation\" countries prior to the introduction of the euro.",
    "The criterion has positively influenced the public stance toward low inflation.",
    "The criterion has biased the choice of the disinflation strategy toward short-run, fiat measures—rather than adopting structural reforms with longer-term benefits.",
    "This bias has \"unpleasant consequences for the efficiency of the eurozone transmission mechanism.\"",
    "The criterion is unnecessarily tight for new member countries because it \"mainly reflects cyclical developments.\"",
    "Short-run, fiat disinflation measures have been favored over structural reforms, implying potential long-term costs for eurozone monetary transmission and efficiency.",
    "For new EU member countries, the tightness of the criterion may impose undue constraints given the cyclical nature of the inflation signals it captures.",
    "The trade-off highlighted suggests a need to reassess the criterion’s calibration or its application to new members to avoid discouraging structural reforms that yield longer-term benefits.",
    "**_wp06154**"
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