Open Access
Article
SciPap-2311
Inflation Persistence and Economic Growth Under Unconventional Monetary Policies in the Euro Area
1 Faculty of Public Administration, University of Pavol Jozef Šafárik, Popradská 66, Košice 040 11, Slovakia
2 Faculty of Economics, Department of Economics, Technical University of Košice, Němcovej 32, Košice 04001, Slovakia
3 Faculty of Economics, Department of Economics, Technical University of Košice, Němcovej 32, Košice 04001, Slovakia
4 Faculty of Economics, Department of Economics, Technical University of Košice, Němcovej 32, Košice 04001, Slovakia
5 Fakulta informatiky a statistiky, Katedra štatistiky a pravdepodobnosti, Vysoká škola ekonomická v Praze, nám.W.Churchilla 4, Praha 3 130 67, Czechia
* Authors to whom correspondence should be addressed.
Abstract: During the COVID-19 pandemic, the European Central Bank implemented an expansive monetary policy, primarily through quantitative easing, to mitigate the economic downturn and stimulate growth. While QE effectively supported economic activity, it also contributed to inflationary pressures as an unintended side effect. This study investigates the persistence of inflation in the euro area and examines the role of QE across three distinct periods: pre-pandemic, pandemic, and post-pandemic (2009–2022). By employing a panel data approach and estimating a dynamic model using the System Generalized Method of Moments, we aim to capture the lagged effects and potential endogeneity inherent in the inflation-growth relationship. Our findings suggest that inflation in the EA exhibits a high degree of persistence, implying that inflation shocks have lasting effects over time. Furthermore, QE appears to influence inflation with a one-year lag, indicating a delayed monetary policy transmission to price levels. In contrast, economic growth reacts more rapidly to QE interventions, typically within the same year. These results have important implications for the timing and calibration of monetary policy responses in the context of future economic crises and for non-euro area members to weigh the trade-off between monetary policy flexibility and integration. Finally, it is important to consider the possibility of combining quantitative easing with a moderately restrictive fiscal policy that could mitigate the adverse effects on inflation.
Keywords: Economic Growth, Monetary Policy, Euro Area, Quantitative Easing, Pandemic Crisis, Inflation Persistence
JEL classification: E31 - Price Level • Inflation • Deflation, E52 - Monetary Policy
Received: 4 June 2025 / Revised: 3 February 2026 / Accepted: 4 February 2026 / Published: 3 March 2026
