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Low rates of inflation (or possible deflation) across the whole euro area increase the difficulty of extending improvements in cost competitiveness through price reductions.
because the deflation of the current value of output has been carried out by using price indexes that re-weight the component goods
but, before tackling less tractable conceptual questions we should briefly review their bearing on the puzzle of the slowdown and the computer productivity paradox. 2. 1 Over-deflation of output:
the hedonic deflation of investment expenditures on computer equipment contributes to raising the measured growth of the computer capital services,
or even deflation, in key advanced economies remains a tangible risk that could derail recovery
At least the country's battle against deflation has started bearing fruit: prices in 2013 increased for the first time in five years by a low 0. 4 percent.
In order to capture the idea that both high inflation and deflation are detrimental, inflation enters the model in a U-shaped manner as follows:
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