Have there ever been episodes where inflation disappeared without this being the result of a restrictive monetary policy?
There are now two theories concerning the inflation dynamics: Theory 1: the decline in activity will bring inflation back to normal without the need to move to a very restrictive monetary policy; Theory 2: central banks will have to conduct a far more restrictive monetary policy than is currently anticipated in order to bring inflation back close to their inflation target. We look at whether in the past, in the United States and the euro zone, Theory 1 (fall in inflation without a truly restrictive monetary policy) has ever been relevant. We see that the only cases where a fall in inflation occurred without a restrictive monetary policy were after recessions (1990-92, 2000-2001, 2008-2009, 2011-2013 in the euro zone), but never outside the periods following recessions.