Is there a threat of self-reinforcing deflation in the Euro area? A view through the lens of the Phillips curve

The recent decline in euro area inflation has triggered new calls for additional monetary stimulus by the ECB in order to counter the threat of a self‐reinforcing deflation and recession spiral. This note reviews the ava
The recent decline in euro area inflation has triggered new calls for additional monetary stimulus by the ECB in order to counter the threat of a self‐reinforcing deflation and recession spiral. This note reviews the available evidence on inflation expectations, output gaps and other factors driving current inflation through the lens of the Phillips curve. It also draws a comparison to the Japanese experience with deflation in the late 1990s and the evidence from Japan concerning the outputinflation nexus at low trend inflation. The note concludes from this evidence that the risk of a selfreinforcing deflation remains very small. Thus, the ECB best await the impact of the long‐term refinancing operations decided in June that have the potential to induce substantial monetary accommodation once implemented for the first time in September.
show moreshow less

Export metadata

  • Export Bibtex
  • Export RIS

Additional Services

    Share in Twitter Search Google Scholar
Metadaten
Author:Volker Wieland, Maik Wolters
URN:urn:nbn:de:hebis:30:3-349948
URL:http://www.imfs-frankfurt.de/fileadmin/user_upload/IMFS_WP/IMFS_WP_80_Remsperger.pdf
Parent Title (German):Working paper series / Institute for Monetary and Financial Stability ; 81
Series (Serial Number):Working Paper Series : Institute for Monetary and Financial Stability (81)
Publisher:Johann Wolfgang Goethe-Univ., Inst. for Monetary and Financial Stability
Place of publication:Frankfurt am Main
Document Type:Working Paper
Language:English
Year of Completion:2014
Year of first Publication:2014
Publishing Institution:Universitätsbibliothek Johann Christian Senckenberg
Release Date:2014/09/19
Issue:Version September 2, 2014
Pagenumber:15
HeBIS PPN:348151551
Institutes:Wirtschaftswissenschaften
Institute for Monetary and Financial Stability (IMFS)
Sustainable Architecture for Finance in Europe (SAFE)
Dewey Decimal Classification:330 Wirtschaft
Sammlungen:Universitätspublikationen
Licence (German):License Logo Veröffentlichungsvertrag für Publikationen

$Rev: 11761 $