The conference paper by Arce, Hurtado and Thomas (2015) develops a two-region model of the euro area with deleveraging, showing that a reform in a peripheral region which increases future output has always short-term expansionary effects on the domestic economy. However, depending on the presence of the ZLB, the reform may generate positive or negative spillovers on the core region. Conclusions Let me conclude.
Inflation dynamics since the Great Recession have shown signs of instability that have led to a sequence of systematic forecasting errors. The two puzzles of  BIS central bankers’ speeches  7  “missing disinflation” and “excessive disinflation” triggered a surge of new research around the Phillips curve and its possible demise, which seems to have been prematurely foretold.