A world without inflation


Quite the opposite, as in most of these countries the inflation rate remains below or well below the official targets of the main central banks (typically 2% or just below). Global inflation has been on a downward trend since the early 1980s.

This paper argues that the advent of anti-inflation-oriented central banks in the late 1970s combined with structural shifts in the global economy, such as globalization, technological innovations and weakening trade union influence, have been key factors behind falling trend inflation in the developed world. Since 2008, this strong disinflationary trend has been compounded by a powerful negative demand shock.

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