That being said, a prolonged period of low inflation is always likely to be exacerbated by backward-lookingness in wage and price formation that occurs due to institutional factors, such as wage indexation. This has plainly happened in the euro area.
First, and probably most importantly, the profitability of large corporations during the early 1900s was accompanied by an expanding middle and upper class that wanted to take part in the economic gains associated with the introduction of new technologies such as the internal combustion engine and the electric motor.