• Euro Area Inflation: Why Low For So Long?

    28 days ago - By iMF Direct

    By Yasser Abdih , Li Lin , Anne-Charlotte Paret
    August 28, 2018
    Sculpture of the euro outside the European Central Bank, Frankfurt, Germany: Convergence of core inflation towards the ECB's medium-term objective is likely to be gradual
    The euro area economy is in its fifth year of recovery, unemployment is close to its pre-crisis level and the output gaps of most countries have closed. Yet, core inflation continues to be low, notwithstanding temporarily high headline inflation due to higher energy prices.
    The puzzle
    It may look as if the traditional Phillips curve relationship between core...
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