Opinion piece by Vítor Constâncio, Vice-President of the ECB, in defence of monetary policy:
Using several models, ECB staff estimated that, without our policies, inflation would have been a third of a percent negative in 2015 and would have stayed significantly negative throughout 2016, which would mean that we would have been in permanent deflation since last year. This is a significant result.
We estimate that two thirds of one percent of the registered growth in the past two years was due to our monetary policy.
To normalise inflation in the euro area we urgently need higher growth that can reduce negative output and unemployment gaps, using all really available policies. If not monetary policy, then what?
A useful example of taking advantage of the mighty expert power of a central bank and its modeling capabilities to illustrate the point in external communication.