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What can keep euro area inflation high?

Author

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  • Reis, Ricardo

Abstract

A central bank that faces inflation above target may fail to bring it down. This article discusses six ways in which this happens because the central bank is dominated by: misjudgment, expectations, fiscal policy, financial markets, recession fears, or external forces. It applies this approach to the challenge facing the ECB in 2023-24. The hope is that the factors identified can serve as warning signs for what to avoid.

Suggested Citation

  • Reis, Ricardo, 2023. "What can keep euro area inflation high?," LSE Research Online Documents on Economics 120728, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:120728
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    File URL: http://eprints.lse.ac.uk/120728/
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    More about this item

    Keywords

    monetary policy; interest rates; central bank independence; OUP deal;
    All these keywords.

    JEL classification:

    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation

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