For example, a relatively low elasticity of substitution between short- and long-term bonds implies a sizeable domestic effect of the ECB’s asset purchases on term premia, whereas a relatively high elasticity of substitution between domestic and rest-of–the-world bonds is key for generating large spillovers from to rest-of-the-world term premia.
The ECB's definition of price stability should be seen as a quantification of the ECB's primary objective, which applies to the euro area as a whole. This implies that for the single monetary policy to be considered successful in fulfilling its primary objective only aggregate developments matter. The euro area countries need not and will not always exhibit similar price developments.