In his paper to be presented at the ECB Sintra Conference Krugman wrote: Inflation Targets Reconsidered. But it´s not about defining a “better” target, only about raising the “2% fits (almost) all” to something like 4%!

It´s a waste of time because it is the wrong product to the wrong customers at the wrong time!

And there are just too many “traps” involved. According to Krugman, in addition to the “Liquidity Trap” and the “Low Inflation Trap” strong headwinds will come from:

The “Complacency Trap” (that befalls policymakers when inflation is below target) The “Credibility Trap” (hard to convince the general public they will not be complacent) The “Timidity Trap” (where 2% is not enough anymore to convince others of your resolve)