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Dancing on the edge of stagflation

Author

Listed:
  • Pierpaolo Benigno
  • Paolo Canofari
  • Giovanni Di Bartolomeo
  • Marcello Messori

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.

Suggested Citation

  • Pierpaolo Benigno & Paolo Canofari & Giovanni Di Bartolomeo & Marcello Messori, 2022. "Dancing on the edge of stagflation," wp.comunite 00155, Department of Communication, University of Teramo.
    • Handle: RePEc:ter:wpaper:00155
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    Keywords

    ECB; stagflation; monetary policy; euro area; financial stability;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • F45 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Macroeconomic Issues of Monetary Unions

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