because there is uncertainty about the prevailing price and wage formation mechanism. Using small macro models, Coenen (2003) and Angeloni, Coenen and Smets (2003) find that in this case the monetary policy maker is well advised to base his decisions on the assumption of a relatively high degree of persistence. III. Inflation dispersion  Let me now turn to the cross-sectional dimension, i.e.
The convergence process itself will generate imbalances that, if not addressed properly, may be dangerous for macroeconomic stability. If the imbalances are neglected, the country may, at best, stay in the accession process for a long time.