Dancing on the edge of stagflation

Pierpaolo Benigno, Paolo Canofari, Giovanni Di Bartolomeo () and Marcello Messori

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Abstract: The ECB faces a challenging trade-off between inflation control and preventing recession in the euro area. This paper suggests a strategic sequence to manage this balance, favoring a delay in asset purchase cessation over rate hikes to avoid stagflation and fragmentation. We critique the ECB’s new anti-fragmentation tool, proposing a rules-based integration with EU fiscal policies.

Keywords: ECB; stagflation; monetary policy; euro area; financial stability (search for similar items in EconPapers)
JEL-codes: E31 E58 F45 (search for similar items in EconPapers)
Date: 2022-12
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Working Paper: Dancing on the edge of stagflation (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:ter:wpaper:00155

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