The ECB and the Inflation Monsters: Strategic Framing and the Responsibility Imperative (1998-2023)

The recent resurgence of inflation in Europe has led the ECB to increase interest rates and phase out asset purchase programs designed to address the effects of the Great Financial Crisis. This article investigates how the ECB adjusts its logic of responsibility throughout this series of crises. Using a topic model and in-depth analysis of speeches, we examine the ECB's strategic framing of linkages related to inflation during three historical periods: the Central Bank Independence (CBI) era (1998-2011), the secular stagnation era (2011-2021), and the new inflation era (2021-). Our findings indicate that modifications made to the CBI's linkages during the secular stagnation era shaped the ECB's framing of the new inflation era in a novel way. However, despite acknowledging difficult policy tradeoffs, which they used to downplay in the past, ECB policymakers have continued to reframe its initial imperative of responsibility in the hope of avoiding policy discussions on regime change.

From the Stagflation to the Great Inflation: Explaining the US economy of the 1970s

This article proposes a history of the evolution of macroeconomists’ explanations of the 1970s US stagflation, from 1975 to 2013. Using qualitative and quantitative methods, 1) I observe the different types of explanations coexisting at different periods ; 2) I assess which was the dominant type of explanations for each period ; and 3) I identify the main sources of influence for the different types of explanation. In the late 1970s and early 1980s, supply-shocks and inflation inertia were fundamental concepts to explain stagflation. The interest on this topic progressively vanished after 1985. In the 1990s, it was a totally new literature which emerged almost without any reference to past explanations. This literature focused on the role played by monetary policy in the late 1960s and the 1970s to account for the rise of inflation. New Classical economists’ contributions, like Lucas (1976), Kydland and Prescott (1977) or Barro and Gordon (1983a), which were ignored by stagflation explanations in the 1970s/1980s, became major references to account for the 1970s stagflation in the 1990s.