ECB prevented further eurozone deflation, BdF paper says


The European Central Bank stopped the eurozone from suffering deflation from 2015–17, a working paper published by the Banque de France argues.

In Evaluating the macroeconomic effects of the ECB’s unconventional monetary policies, Sarah Mouabbi and Jean-Guillaume Sahuc look at data from the eurozone from 1999 to 2017.

The authors present a dynamic stochastic general equilibrium model, which features “shadow interest rates” derived from a term structure model. The authors write that the shadow

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