Dancing on the edge of stagflation

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

No 155, CIMEO, Sapienza University of Rome from Department of Economics and Law, Sapienza University of Rome

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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