OECD: Important to understand the extraordinary importance of the absence of inflation at full employment

Because employees' bargaining power is weak and companies’ pricing power is weak, inflation has remained low in OECD countries - depending on the country - despite the low unemployment rate. It is important to understand the extreme importance of the absence of inflation at full employment; as long as this configuration lasts , it makes it possible: To have highly expansionary monetary policies and very low interest rates, and therefore to ensure the solvency of all economic agents, even those that are very indebted, and therefore to sharply reduce the risk of recession; To have highly expansionary fiscal policies, thanks to the very low interest rates, which can be used efficiently (increase in useful public investments) or inefficiently (increase in current fiscal deficits). This shows the extreme importance for economists to reflect on what could bring back inflation at full employment.