The Ghost of Deflation Past. CEPS Hi-level Brief, 13 December 2013

This note takes a look at the development of monetary aggregates and debt in the G7 (US, UK, France, Germany, Italy, Canada and Japan), plus non-G7 euro-area countries, which have an important bearing on the future development of price levels. It also discusses the problem of restoring external competitiveness in the weaker euro-area countries without aggravating their debt burden. The key conclusions are i) monetary and debt developments in the G7 countries point to relatively sluggish growth but do not signal deflation risks and ii) the realignment of ‘internal real exchange rates’ in the euro area will most likely come through a rise in prices in Germany (and a few other stronger countries). The lessons learned in the early 1930s have made a come-back of deflation quite unlikely.

The Effects of Ultra-Loose Monetary Policies on Inequality. Bruegel Policy Contribution Issue 2015/09, June 2015

Highlights • Low interest rates, asset purchases and other accommodative monetary policy measures tend to increase asset prices and thereby benefit the wealthier segments of society, at least in the short-term, given that asset holdings are mainly concentrated among richest households. • Such policies also support employment, economic activity, incomes and inflation, which can benefit the poor and middle-class, which have incomes more dependent on employment and which tend to spend a large share of their income on debt service. • Monetary policy should focus on its mandate, while fiscal and social policies should address widening inequalities by revising the national social redistribution systems for improved efficiency, intergenerational equity and fair burden sharing between the wealthy and poor.