학술논문
The Second Regime : Deflation Risks
Document Type
Chapter
Author
Rostagno, Massimo, author; Altavilla, Carlo, author; Carboni, Giacomo, author; Lemke, Wolfgang, author; Motto, Roberto, author; Guilhem, Arthur Saint, author; Yiangou, Jonathan, author
Source
Monetary Policy in Times of Crisis : A Tale of Two Decades of the European Central Bank, 2021, ill.
Subject
Language
English
Abstract
That the euro area economy had switched over into the second regime described in Chapter 3 became more evident in the last phase of the crisis. In this chapter, we describe the landscape facing the ECB in 2013 and 2014, with disinflationary demand shocks replacing inflationary cost-push shocks as the dominant force in the economy. With conventional policy unavailable, we outline the series of unconventional policies launched by the European Central Bank (ECB) to avert a multi-year depression and the deflation scenario that would have accompanied it. We chart the evolution from a policy of ‘separation’ to one of ‘combination’, with different policies seen as mutually reinforcing in fighting deflation risks. We illuminate how the ECB responded to key obstacles such as breaking through the zero lower bound (ZLB) on interest rates and implementing liquidity policies in a deleveraging banking sector.