Inflation in advanced economies is low by historical standards but there is no threat of deflation. Slower economic growth is caused by supply-side constraints rather than low inflation. Below-the-target inflation does not damage the reputation of central banks. Thus, central banks should not...

We reassess the effects of contractionary monetary policy on income inequality by investigating whether inflation targeting affects this nexus. Using data across the G12 economies from 1974 to 2019, we find that contractionary monetary policy shocks tend to increase disposable income inequality....