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Understanding Euro Area Inflation Dynamics: Why So Low for So Long?

Despite closing output gaps and tightening labor markets, inflation has remained low in the euro area. Based on an augmented Phillips Curve framework, we find that this phenomenon—sometimes attributed to low global inflation—has been primarily caused by a remarkable persistence of inflation, keeping...

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Bibliographic Details
Main Author: Abdih, Yasser
Other Authors: Lin, Li, Paret, Anne-Charlotte
Format: eBook
Language:English
Published: Washington, D.C. International Monetary Fund 2018
Series:IMF Working Papers
Subjects:
Dynamic Treatment Effect Models
Labour
Prices, Business Fluctuations, And Cycles: Forecasting And Simulation
Deflation
Production
Labor
Production And Operations Management
Import Prices
Income Economics
Business Fluctuations
Output Gap
Labor Market
Inflation
Time-series Models
Inflation Persistence
Prices
Imports
Labor Markets
Economic Theory
Macroeconomics
Macroeconomics: Production
Price Level
Demand And Supply Of Labor: General
Dynamic Quantile Regressions
Econometric Modeling: General
Cycles
Diffusion Processes
General Aggregative Models: General
Monetary Policy
United States
Online Access:
Collection: International Monetary Fund - Collection details see MPG.ReNa
Description
Summary:Despite closing output gaps and tightening labor markets, inflation has remained low in the euro area. Based on an augmented Phillips Curve framework, we find that this phenomenon—sometimes attributed to low global inflation—has been primarily caused by a remarkable persistence of inflation, keeping it low despite the reduction in slack. This feature is shown to be specific to the euro area (in comparison with the United States). Monetary policy needs to stay accommodative to help guide inflation back to target
Physical Description:25 pages
ISBN:9781484372562

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