Keynesian theory was taught and applied, but Modigliani also encouraged me to look into the work of Friedman, who was refocusing attention on classical monetary theory. Friedman had restated the quantity theory of money in 1956. In his Presidential address to the American Economic Association in December 1967 he prefigured the explanation of the stagflation of the 1970s.
Furthermore, sluggish growth in the rest of the world has not generated sufficient external demand for the euro area that could offset the shrinkage in domestic demand driven by the collective acts of fiscal consolidation.