Closing the EU’s inflation governance gap

Table of Contents

• LIST OF ABBREVIATIONS 6
• LIST OF BOXES 7
• List of figures 7
• EXECUTIVE SUMMARY 8
• 1. Introduction 11
• 2. EU Inflation policy and the end of the Great Moderation 13
• 2.1. Two types of shockflation: The 1970s and today’s dynamics of sellers’ inflation 13
• 2.2. The ECB’s operational framework and the exceptional circumstances of the Great Moderation 15
• 2.3. The end of the Great Moderation 18
• 3. Making the EU ready for a world of shockflation 20
• 3.1. The limits of monetary policy 20
• 3.2. The return of sectoral policies 22
• 4. A new EU governance structure for inflation 25
• 4.1. Inflation governance within the EU Treaties 25
• 4.2. Price shock monitoring to anticipate supply disruptions 27
• 4.3. Avoiding shocks to systemically important sectors 28
• 4.4. Stopping proliferation and amplification and avoiding distributive conflict 30
• 5. Conclusion: Policy recommendations 32
• REFERENCES 33