Second, if instead inflation becomes very low, monetary policy would have to stimulate economic activity more strongly and could lack effective instruments to do so, given the zero lower bound (ZLB) on nominal interest rates. In sum, a flatter slope of the Phillips curve would make controlling inflation either more costly or more difficult.
In this context, a surprising development is the emergence, of a “twin puzzle” after the Great Recession: first, “missing disinflation” from 2009 to 2011, and second, “excessive disinflation” after 2012, particularly in Europe. During the Great Recession, inflation in advanced countries did not fall as much as a traditional Phillips curve predicted, given the severity and length of the recession.