We are indebted to academic research for showing that the attempts to exploit a trade-off between inflation and unemployment eventually only lead to higher inflation. It thus re-established a firm basis for the concept of the long-term neutrality of money. Indeed, this is a perfect example of an academic insight that has become a deep-seated principle of central banking.
It states that in a situation of significant economic shock, structural reforms may have a negative effect on short-term demand. Such a conclusion, implying that structural reforms should be postponed – and here again I refer to President Draghi’s speech 4 – has nevertheless to be rejected.