01824cas a2200241 a 4500 AALejournalIMF009795 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451868838 1018-5941 BD-DhAAL BD-DhAAL International Monetary Fund. Inflation Differentials in the EU : A Common (Factors) Approach with Implications for EU8 Euro Adoption Prospects. Washington, D.C. : International Monetary Fund, 2008. 1 online resource (39 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students This paper explores inflation determinants within the EU and implications for new members' euro adoption plans. Factor analysis partitions observed inflation in EU25 countries into common-origin and country-specific (idiosyncratic) components. Cross-country differences in common-origin inflation within the EU are found to depend on gaps in the initial price level, changes in the nominal effective exchange rate, the quality of institutions, and the economy's flexibility. Idiosyncratic inflation is generally small in magnitude. Nonetheless, the results show that country-specific shocks have systematically pushed down headline inflation, potentially influencing the assessment of compliance with the Maastricht inflation criterion. Mode of access: Internet IMF Working Papers; Working Paper ; No. 2008/021 Full text available on IMF http://elibrary.imf.org/view/journals/001/2008/021/001.2008.issue-021-en.xml IMF e-Library