Expert group studying the causes of low inflation (LIFT)

Purpose

Since 2012, inflation has been unexpectedly low across much of the developed world, including the euro area. In 2015, the European System of Central Banks (ESCB) set up a network of experts to study the causes of this low inflation and to research the implications for policy. That research, conducted from March 2015 to June 2016, is published here and represents the views of the authors and not necessarily those of the ECB or the ESCB.

Findings

The research finds that the excessive disinflation over the period was primarily down to cyclical factors, principally domestic in the earlier part of the period and global in nature in the latter part, notably the sharp fall in global energy and other commodity prices. The succession of negative shocks constrained headline inflation for a prolonged period, and there were indications of an increase in the persistence of inflation, and a fall in the trend inflation rate.

There is some evidence that these low short-term inflation outturns had begun to have a greater influence on longer-term inflation expectations in 2014-15, although the influence of short-term factors on inflation expectations lessened at longer horizons, implying continued public belief in the ECB’s commitment to its inflation objective.

The research also finds that unconventional measures have been effective in mitigating the downside risks to price stability, curtailing risks of de-anchoring, and expanding aggregate demand.

Publications

No. 181
25 Jan 2017
Low inflation in the euro area: Causes and consequences
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No. 2006
25 Jan 2017
Demographics and inflation
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No. 2005
25 Jan 2017
Low inflation and monetary policy in the euro area
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No. 2004
25 Jan 2017
Mind the output gap: the disconnect of growth and inflation during recessions and convex Phillips curves in the euro area
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No. 2003
25 Jan 2017
Exchange rate pass-through in the euro area
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No. 2002
25 Jan 2017
Changing prices... changing times: evidence for Italy
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No. 2001
25 Jan 2017
Will US inflation awake from the dead? The role of slack and non-linearities in the Phillips curve
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No. 2000
25 Jan 2017
Missing disinflation and missing inflation: the puzzles that aren't
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No. 1999
25 Jan 2017
The long-term distribution of expected inflation in the euro area: what has changed since the great recession?
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No. 1998
25 Jan 2017
Inflation anchoring in the euro area
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No. 1997
25 Jan 2017
Tail co-movement in inflation expectations as an indicator of anchoring
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No. 1996
25 Jan 2017
A new indicator of inflation expectations anchoring
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No. 1995
25 Jan 2017
Unconventional monetary policy and the anchoring of inflation expectations
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No. 1994
25 Jan 2017
Trust, but verify. De-anchoring of inflation expectations under learning and heterogeneity
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No. 1948
29 Aug 2016
Advanced economy inflation: the role of global factors
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No. 1945
26 Aug 2016
Anchoring of inflation expectations in the euro area: recent evidence based on survey data
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No. 1942
25 Aug 2016
Policy spillovers and synergies in a monetary union
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