Price stability appears to be conducive to economic growth, low unemployment and subdued income volatility. Recent developments in the main advanced economies in terms of volatility of inflation and GDP growth confirm this insight and show that there has been no trade-off between the two variables.14 Volatility has been low in both variables in the euro area by comparison with other major economies.
The crisis period is illustrative of this complementarity. After 2007, output and inflation volatility increased everywhere, but the combination remained more favourable in the euro area, which suggests that the recent policy easing aimed at checking deflationary risks also helped to sustain the economy.