The rise and fall of inflation in the Euro Area (2021-2024): A heterodox perspective

IF 5 2区 经济学 Q1 ECONOMICS Structural Change and Economic Dynamics Pub Date : 2024-12-09 DOI:10.1016/j.strueco.2024.12.004
Vicente Ferreira , Alexandre Abreu , Francisco Louçã
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Abstract

Over the period of 2021–2024, inflation has resurged and then retreated in most industrialized countries. Economists were divided into two main camps: team transitory, which argued that inflationary pressures were primarily cost-push and would tend to fade away as supply disruptions eased, and team permanent, which viewed it as a predominantly demand-pull process and warned about the risks of persistent second-round effects associated with an overheated labor market. This paper covers this theoretical debate on the origins of inflation and contrasts it to the available empirical evidence for the Euro Area, laying out several inconsistencies in the New Keynesian argument proposed by team permanent. Since that was, nevertheless, the predominant interpretation among central bankers, including the ECB, this paper also discusses the impacts of monetary policy decisions informed by the New Keynesian view, arguing that there is good reason to believe that it has had regressive consequences in terms of the functional distribution of income as well as differentiated impacts across Euro Area core and periphery countries.
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来源期刊
CiteScore
9.60
自引率
4.90%
发文量
159
期刊介绍: Structural Change and Economic Dynamics publishes articles about theoretical, applied and methodological aspects of structural change in economic systems. The journal publishes work analysing dynamics and structural breaks in economic, technological, behavioural and institutional patterns.
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