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Full-Text Articles in Behavioral Economics
Monetary Policy And Stagflation: A Trade-Off Between Price Stability And Economic Growth?, Leef H. Dierks
Monetary Policy And Stagflation: A Trade-Off Between Price Stability And Economic Growth?, Leef H. Dierks
Journal of New Finance
Several euro area economies are likely to experience a stagflation in 2023. This situation is characterized by a combination of economic stagnation, i.e., GDP growth falling below its potential growth rate, and a pronounced increase in inflation as was last observed during the 1970s’ oil crisis. A stagflation presents the European Central Bank with a dilemma. Should it further tighten its monetary policy in an attempt to align euro area inflation (expectations) with its target of two per cent p.a. in the medium term? Or should the ECB re-adopt a more accommodative stance so as to stimulate economic growth in …