The Economics Show
Are we in for a hard landing? With Olivier Blanchard
Jun 17, 2024
Former IMF chief economist Olivier Blanchard joins Soumaya Keynes to discuss the responses of 10 central banks to recent inflation, potential causes, and the need for a hard landing to reach 2%. They also cover Blanchard's changed views, France's right-wing shift, and various economic strategies including VAT reductions and early elections.
30:17
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Quick takeaways
- Inflation dynamics are influenced by labor market and commodity shocks, not just traditional factors like tight labor markets or unanchored inflation expectations.
- Adjustments in economic models are necessary due to unexpected channels of inflation, requiring updates in textbooks while retaining core concepts.
Deep dives
Causes of Inflation: Labor Market and Commodity Shocks
In the podcast, Olivier Blachard discusses the causes of inflation, emphasizing the impact of labor market and commodity shocks. He highlights that while traditional models focused on tight labor markets or unanchored inflation expectations, they overlooked the role of relative price shocks, particularly from commodity markets. Blachard suggests that understanding these factors is crucial in explaining inflation dynamics.
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