How does the way the EU/Euro Area is set up influence the fight against inflation?

Facing an Aging Crisis: Is Immigration the Solution

Script with References 1. Introduction Welcome to Christmas Special! My name is Lisa Weiss and today’s panel will center around the following question: facing an ageing crisis: is immigration the solution? The rapid ageing of the population - coupled with a decrease in birth rates - presents countries with a formidable challenge. Interestingly enough, we hear voices from both sides: while economists such as Giovanni Peri strongly advocate for the beneficial role of immigrants, experts including Martin Feldstein are more skeptical. Given the media attention this issue has been given, today we have brought together two experts – Vassily Merkulenko and Chiara Paretti (they say hi)– to explore whether and to what extent immigration can provide an economic solution to these ageing populations. According to the World Bank’s Development Report 2023, the developed world is facing a tremendous demographic shift. On the one hand, birth rates are plunging. This year, the World Economic Forum released statistics indicating that between 1950 and 2022, Mexico’s fertility rate dropped from nearly 7 to 1.8, well below the 2.1 needed for population replacement. This is contrary to Malthusian logic, which holds that the population grows when living standards increase. Furthermore, it stated that high- and middle-income countries are ageing quickly. The share of people over 65, is now at 20%, but is expected to reach 30% in just a few decades. Spain’s population of 47 million is projected to shrink by more than one-third by the end of the century, with those over 65 accounting for almost half of the population (Devictor, 2023). In an article that came out only 2 weeks ago, Business Insider points to shifting demographics as a direct cause for disinflation in countries such as South Korea, Italy, and now China. Japan is perhaps the most striking example of this phenomenon. In fact, Eurizon strategists refer to Japan as a living example of how an ageing population leads to aggregate demand outpacing supply. Economists like Feldstein already suggested in 2006 that the combination of increased longevity and a reduced birth rate will directly reduce the growth rates of economies. The ageing of the population will present a major fiscal challenge for governments, as slower growth of GDP means less tax revenue at the same time that social pensions and health care (which are currently tax-financed) will substantially increase. This means there will be fewer workers to support older people and growth and that countries will need to seek out immigrants to sustain their economies and fill labour shortages (Devictor, 2023). Thus, we wonder: is immigration the solution? We will start by looking in more detail into the effects of ageing populations on labour supply. Vassily, what does the empirical evidence suggest? Discussion * LABOR PARTICIPATION/SUPPLY Vasily: Total net immigration can offset a decline in labor participation from aging. Labor participation, or the participation rate, refers to the percentage of the working-age population employed or seeking employment. It is calculated by dividing the labor force by the population of working age. According to Giovanni Peri, migrants are typically younger than natives and a larger proportion are in working age relative to natives. Thus they increase the size of the labor force which counters natural decline (where more people age out of working age than how many come in)(Peri, 2020). Lisa: Is there a concrete example of migrants increasing labour participation within a country suffering from an ageing crisis? Vasily: Yes, we can see this benefit through Sweden. In Sweden, ¼ of the population will be over 65 by 2050 (Segendorf & Theobald, 2019). Among the native population, 54% are working age which means there is a high-dependency ratio. However, among the immigrants, 70% are working age with a low dependency ratio. Accordingly, immigrants have a good age structure for aging societies and without them, Sweden would suffer more from aging (Segendorf & Theobald, 2019). Chiara: Yes, but young migrants are not the sole solution. The real challenge lies in swiftly integrating these immigrants into the labor market (AGING SOCIETIES Policies and Perspectives, 2019). Simply increasing immigration numbers won't support high economic output alone. As Professor Joan Muysken mentions, it needs to be supplemented by increasing the labor force participation rate, not just among the young but especially among the older population (Muysken, 2008). Vasily: Yes but immigrants do still increase the wider participation in the labor market, particularly among highly skilled native women when there is an inflow of lower-skilled female labor migrants (AGING SOCIETIES Policies and Perspectives, 2019). This offsets the low labor force participation in aging populations. Chiara: But is this truly relevant in the long term? Leith Van Onselen states that while immigration can help in the short term, it primarily affects population numbers but doesn't significantly alter the long-term age structure. This is because immigrants themselves will age and eventually add to the older population segment. Therefore, we should not solely rely on immigration but better enhance the productivity of the aging workforce as well as foster social and healthcare systems that effectively cater to an older population (Onselen, 2017). Vasily: But we also have to note immigrant fertility rates are higher than those of natives (Peri, 2020). For example, Giovanni Peri notes that in the US, the total fertility rate of natives was 1.76 children per woman in 2017, whereas that of immigrants was 2.18 (Peri, 2020). This helps keep fertility levels close to replacement level which is needed especially in aging societies to provide labor supply in the long run (Peri, 2020). Lisa: Thank you! I think we have now a clearer picture of the dynamics of labour participation. Let’s turn to the skill composition of immigrants. Vassily, what insights can you share with us? * SKILL COMPOSITION/EMPLOYMENT Vasily: The concept of complementarity is key to bring up. Complements to immigrant labor are factors of production, which differ from the immigrants, that become more productive with immigration. Therefore, if immigration acts as a complement in the production of a variety of goods and services, it has a positive effect on productivity, countering the decrease in productivity from aging (Segendorf & Theobald, 2019). Using this concept of complementarity, Segendorf & Theobald state that low-skill immigration has positive wage and employment effects on high-skill natives. These natives now have higher relative qualifications and can take on more complex tasks (Segendorf & Theobald, 2019). Chiara: Indeed, the concept of complementarity holds significant merit, however, we must also be cautious not to overlook the potential downsides regarding the immigrants’ skills. Indeed, Sgendorf and Theobald also acknowledge that an influx of low-skilled immigrants might lead to direct competition with low-skilled native workers, possibly impacting their wages and employment opportunities negatively on wages and employment for natives. Vasily: However, you also have to consider that low-skill natives can undergo training or become specialists to avoid this higher competition from immigrants (Segendorf & Theobald, 2019). For example, in Turkey, the high influx of Syrians created more higher-wage formal jobs and enabled occupational upgrading of Turkish workers who now enjoy higher average wages (AGING SOCIETIES Policies and Perspectives, 2019). This promotes growth under the strain of the elderly. Chiara: True, training and specialization are pathways for natives to avoid competition. However, this is not always a feasible or quick solution. Plus, as Segendorf and Theobald (2019) point out, it's essential to acknowledge that immigrants often arrive with lower human capital than natives, which can lead to a short-term decrease in average productivity. This reduction in productivity can be particularly challenging in aging societies where there is a pressing need for a skilled workforce to offset the economic impacts of a shrinking working-age population. Vasily: But in the long term there can be positive effects, with immigrants generating new ideas and bringing with them a higher probability of creating patents (Segendorf & Theobald, 2019). This can serve useful in raising productivity levels under an aging society. Lisa: Indeed, this is why we need to keep in mind the importance of labour unions and institutions. They play a vital role in the economic development of countries in the long run. Employers can help policymakers identify and define labour needs. They often know best where shortages are, where skills will be needed, and what kind of high- and low-skilled workers are most sought after (Devictor, 2023). According to the European Commission, several countries such as Spain, Finland or Ireland have put in place consultative bodies in which employers — as well as labour unions or local authorities — help identify strong skill matches. Furthermore, decent jobs generally lead to a smooth integration into the labour force and society. Chiara: Also, a notable trend that we witness today, particularly in Europe, is the increasing immigration of refugees. Yet, such a type of immigration doesn’t necessarily offer an effective solution for the challenges of aging. Refugees often lack local network ties and familiarity with the labor market, which hinders their swift integration into the workforce. This situation could further lead to public finance costs due to increased support needs. For instance, in Sweden, there is a notable trend of high unemployment rates among immigrants, particularly refugees. Research by Segendorf & Theobald (2019) indicates that it can take up to 20 years for refugees to become financially self-sufficient in Sweden. Therefore, this adds to the complexities of managing an ageing society with the added responsibility of integrating a new population. Lisa: Exactly, we cannot throw all migrants into one basket. The debate often becomes confused because we use a single word — migration — to refer to distinct types of movements that have different impacts and call for different policy responses (Devictor, 2023). For example, the EU issues about 3 million first residence permits annually. Though these numbers haven’t changed significantly, the number of irregular border crossings increased by almost 70% according to the European Commission (Ioanes, 2023). These individuals are likely to present a negative fiscal burden on the host economy. On the other hand, some also argue that immigrants can counteract the fiscal strain imposed by ageing populations. Vasily, please, tell us more about this. * FISCAL IMPACT Vasily: Since migrants are typically younger than natives, they have positive fiscal contributions over their lifetimes which can balance out the negative fiscal impact of the elderly (Peri, 2020). For example, Giovanni Peri highlights that high-skill immigrants in the US have an average lifetime fiscal contribution of 173 thousand US dollars (Peri, 2020). Professor Joan Muysken also notes even low-skilled immigrants can pay for the pensions of the retired and the benefits of the unemployed natives (Muysken, 2008). Lisa: I believe there is an economic model which underlines this? Vasily: Yes, I believe you are referring to Storesletten’s 2000 model of US public finances which incorporated the difference in productivity and demographics of immigrants and natives. It showed that an increased inflow of immigrants with medium to high knowledge levels and a favorable age composition would bring public finance revenue. This would help counter the financial costs of aging (Segendorf & Theobald, 2019). Chiara: However, for example, since the mid-1990s in Sweden, there has been a shift from labor to refugee immigration, coupled with an aging population, exacerbating the existing economic issues by bringing significant financial costs to the public sector both short and long-term. As Segendorf and Theobald (2019) point out, a key issue is the low employment rate among refugees and their relatives. This leads to decreased tax revenues and increased social welfare costs, challenging the sustainability of Sweden's public finances. Addressing this requires not only effective integration strategies to boost employment among refugees but also a reevaluation of immigration and integration policies to ensure economic and social stability. Lisa: And is this the only limit of immigration for the fiscal state of the host economy? Chiara: Well no. Immigration can further exacerbate issues such as housing shortages and greater infrastructure needs, leading to indirect fiscal impacts. An imbalance between demand and supply often results in escalating property prices and rents, contributing to inflationary pressures. This is particularly impactful for lower-income groups and their household budgets, potentially resulting in stagnating their living standards, an issue exacerbated by an aging population where the increasing proportion of the elderly often rely on fixed incomes. Moreover, the surge in demand for public services like healthcare and education due to immigration strains existing resources, which are already under pressure from an ageing population requiring more medical and social care. This leads to a congestion effect, where services become overburdened and less efficient. Such a situation could be further amplified if the increase in population is not matched by an increase in funding and expansion of these services (Rebelo et al., 2020). Lisa. Indeed, these escalating property prices are obviously directly perceived by the general population, which has often led to societal tensions, anti-immigrant sentiment, and political instability. This partly explains why in Europe far-right political parties are gaining popularity. According to the Guardian, economic grievances, and insecurities around housing, jobs, and futures account for much of the votes. People are seeking ‘livelihood security’ (Hanley, 2023). In fact, the Financial Times goes as far are suggesting that Wilders’ success in the Netherlands is part of a clear Europe-wide developing pattern (Rachman, 2023). Vasily: Just to go back to your point Chiara, I think a balanced approach can mitigate these challenges. For instance, we can look at the concept of the congestion tax, where the government can make immigrants pay for the congestion they impose on natives. Implementing a congestion tax could offset the additional costs of providing services or fund the expansion of these services to meet increased demand (Rebelo et al., 2020). It can also serve as a way of financing the needs of the elderly. Chiara: Finally, I want to broaden our discussion considering the wider economic consequence that Feldstein brings up in his discussions. High marginal tax rates required to finance the benefits as the population ages could reduce national income and economic growth. Therefore, immigration, while beneficial in certain aspects, cannot be the sole solution. It needs to be complemented by other fiscal policies that support the growing needs of an ageing population. Wrap-up: Lisa: I believe this is a good point to wrap up this debate. Thank you so much for your rich insights, I think we learned a lot tonight. Chiara: Thank you for having us. Vasily: This was great. Lisa: As we look ahead to a future where populations are ageing rapidly, migration will play an increasingly important role in supporting global growth and development. Yet, as Chiara pointed out, there are clear limitations to the positive role of immigrants. This is why, to maximize the benefits of immigration, governments need to carefully draw congruent and sensitive policies. Thank you to our audience of the night and remember that the next podcast follows in January, as our team is taking a break for this best season of the year: Merry Christmas!! References AGING SOCIETIES Policies and Perspectives. (2019). Asian Development Bank Institute. https://www.adb.org/sites/default/files/publication/543006/adbi-aging-societies-policies-and-perspectives.pdf [https://www.adb.org/sites/default/files/publication/543006/adbi-aging-societies-policies-and-perspectives.pdf] Das, S. (2023, July 16). Australia’s immigration experience holds lessons for aging Asia. Nikkei Asia. https://asia.nikkei.com/Opinion/Australia-s-immigration-experience-holds-lessons-for-aging-Asia [https://asia.nikkei.com/Opinion/Australia-s-immigration-experience-holds-lessons-for-aging-Asia] Devictor, X. (2023, Jun 16). Why it’s time to rethink migration. World Economic Forum. Why it’s time to reframe the migration debate | World Economic Forum (weforum.org) [https://www.weforum.org/agenda/2023/06/migration-immigration-refugees-worldbank/] Feldstein, M. (2006). The Effects of the Ageing European Population on Economic Growth and Budgets: Implications for Immigration and Other Policies. National Bureau of Economic Research, Inc, NBER Working Papers. https://www.nber.org/system/files/working_papers/w12736/w12736.pdf [https://www.nber.org/system/files/working_papers/w12736/w12736.pdf] Green, D. (2017, July 12). As Its Population Ages, Japan Quietly Turns to Immigration. Migrationpolicy.org. https://www.migrationpolicy.org/article/its-population-ages-japan-quietly-turns-immigration [https://www.migrationpolicy.org/article/its-population-ages-japan-quietly-turns-immigration] Hanley, J. et al. (2023, Dec 1). Why are younger voters flocking to the far right in parts of Europe? The Guardian. Why are younger voters flocking to the far right in parts of Europe? | The far right | The Guardian [https://www.theguardian.com/world/2023/dec/01/younger-voters-far-right-europe] Ioanes, E. (2023, Jul 8). What the Dutch Parliament collapse reveals about European migration. Vox News. What the Dutch government crisis says about immigration - Vox [https://www.vox.com/world-politics/2023/7/8/23788036/dutch-parliament-migration-european-far-right] Islam, S. (2023, Feb 15). The taboos are falling fast as the EU embraces the far-right racist approach to migration. The Guardian. The taboos are falling fast as the EU embraces the far-right racist approach to migration | Shada Islam | The Guardian [https://www.theguardian.com/world/commentisfree/2023/feb/15/eu-far-right-migration-fortress-europe] Muysken, J. (2008). Immigration Can Alleviate the Ageing Problem. http://aei.pitt.edu/11030/1/20090203155203_SCOPE2008-3_2_JoanMuyken.pdf [http://aei.pitt.edu/11030/1/20090203155203_SCOPE2008-3_2_JoanMuyken.pdf] OCDE/Union européenne (2014), Matching Economic Migration with Labour Market Needs, Éditions OCDE, Paris, https://doi.org/10.1787/9789264216501-en [https://doi.org/10.1787/9789264216501-en]. Onselen, L. van. (2017, May 26). Technology, not Immigration, is the Solution to Population Aging. Canadians for a Sustainable Society. https://sustainablesociety.com/256-technology-not-immigration-is-the-solution-to-population-ageing/ [https://sustainablesociety.com/256-technology-not-immigration-is-the-solution-to-population-ageing/] Peri, G. (2020, March). Can Immigration Solve the Demographic Dilemma? – IMF F&D. International Monetary Fund. https://www.imf.org/en/Publications/fandd/issues/2020/03/can-immigration-solve-the-demographic-dilemma-peri [https://www.imf.org/en/Publications/fandd/issues/2020/03/can-immigration-solve-the-demographic-dilemma-peri] Rachman, G. (2023, Nov 27). The far right is moving into Europe’s mainstream. Financial Times. The far right is moving into Europe’s mainstream (ft.com) [https://www.ft.com/content/8384228d-8156-4134-8eb4-035c068704b9] Rebelo, S., Teles, P., & Guerreiro, J. (2020, September 9). Immigration and the welfare state. CEPR. https://cepr.org/voxeu/columns/immigration-and-welfare-state [https://cepr.org/voxeu/columns/immigration-and-welfare-state] Rosen, P. (2023, Nov 27). Japan’s ageing population offers a roadmap for the US economy’s inflation battle. Business Insider. Japan's aging population offers a roadmap for the US economy's inflation battle (businessinsider.nl) [https://www.businessinsider.nl/japans-aging-population-offers-a-roadmap-for-the-us-economys-inflation-battle-2/] Segendorf, Å., & Theobald, E. (2019). Can immigration solve the problem of an aging population? https://www.riksbank.se/globalassets/media/rapporter/pov/artiklar/engelska/2019/190613/er-2019_1-can-immigration-solve-the-problem-of-an-aging-population.pdf [https://www.riksbank.se/globalassets/media/rapporter/pov/artiklar/engelska/2019/190613/er-2019_1-can-immigration-solve-the-problem-of-an-aging-population.pdf] Statistics on migration to Europe. European Commission. Statistics on migration to Europe (europa.eu) [https://commission.europa.eu/strategy-and-policy/priorities-2019-2024/promoting-our-european-way-life/statistics-migration-europe_en#irregular-border-crossings] World Development Report 2023. The World Bank. https://www.worldbank.org/en/publication/wdr2023World Development Report 2023: Migrants, Refugees, and Societies (worldbank.org) [https://www.worldbank.org/en/publication/wdr2023] This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit aucfundamentalsofmacro.substack.com [https://aucfundamentalsofmacro.substack.com?utm_medium=podcast&utm_campaign=CTA_1]

30 de dic de 202316 min

Was The Post-COVID Inflation Surge Transitory?

This podcast episode delves into the complexities of the post-COVID inflation surge. By analyzing the news articles and expert opinions, we attempt to unpack whether inflation was a transitory or a permanent phenomenon, focusing on the US, UK, Japan, and Europe. What we are referencing in our conversation: 0:24 - To look at monthly inflation data of the countries we will be discussing, check this spreadsheet which has compiled statistics from each respective Central Bank: [2] [https://docs.google.com/spreadsheets/d/1Fa7U6OHyTRZPCWzVFcttuZzffWLQgy-JVqtEAomcqPk/] 0:30 - The video by Dr. Schasfoort: [5] [https://www.youtube.com/watch?v=7GMSzNm6i_U] 1:04 - An article which further explores the definition of ‘permanent inflation’: [20] [https://www.financialpipeline.com/inflation-is-back-is-it-transitory-or-will-it-last/] 1:29 - Further explanations on how monetary policy impacts inflation expectation: [21] [https://www.imf.org/en/News/Articles/2023/05/15/sp-role-inflation-expectations-monetary-policy-tobias-adrian] 1:36 - An article which further explores the definition of ‘transitory inflation’: [15] [https://www.forbes.com/sites/georgecalhoun/2023/03/06/what-is-transitory-inflation-1-the-facts/?sh=3ee7c076156a] + inflation expectations [21] [https://www.imf.org/en/News/Articles/2023/05/15/sp-role-inflation-expectations-monetary-policy-tobias-adrian] 2:08 - An European Central Bank report showing how the majority of inflation in the EU and USA were supply-driven: [10] [https://www.ecb.europa.eu/pub/economic-bulletin/focus/2023/html/ecb.ebbox202208_01~c11d09d5fd.en.html#:~:text=Headline%20inflation%20has%20increased%20sharply,euro%20area%20since%20July%202022.] 2:24 - An article by Larry Summers on how the post-COVID inflation surge is permanent due to mishandling of economic policy: [4] [https://www.hks.harvard.edu/centers/mrcbg/programs/growthpolicy/larry-summers-worried-about-inflation-lawrence-summers] 2:40 - For further reading on how fiscal policy could have impacted inflation: [22] [https://cepr.org/voxeu/columns/demand-supply-imbalance-during-covid-19-pandemic-role-fiscal-policy] 3:00 - Article on Christine Lagarde’s recent comments on permanent inflation: [3] [https://www.reuters.com/markets/rates-bonds/ecbs-lagarde-sees-no-rate-peak-call-near-term-2023-06-27] 3:17 - To read more about how the Phillips Curve and Inflation Expectation interact with one another: [21] [https://www.imf.org/en/News/Articles/2023/05/15/sp-role-inflation-expectations-monetary-policy-tobias-adrian] 3:24 - Christine Lagarde’s initial comments: [24] [https://www.bloomberg.com/news/articles/2021-10-16/ecb-policy-will-continue-supporting-the-economy-lagarde-says] 3:31 - Joseph Stiglitz on transitory inflation: [23] [https://www.project-syndicate.org/commentary/us-inflation-red-herring-by-joseph-e-stiglitz-2021-06] 3:55 - Barsky & Kilian’s paper which examines previous oil shocks to examine why inflation rates were so high in the 1970s and 80s in the Western World: [8] [https://doi.org/10.1086/654439] 4:37 - See the historical interest rate data for the United States here: [25] [https://tradingeconomics.com/united-states/interest-rate] 4:45 - See the different types of Government support programmes in OECD countries here: [26] [https://www.oecd.org/coronavirus/policy-responses/government-support-and-the-covid-19-pandemic-cb8ca170/] 6:00 - A graphical representation of how inflation in the USA and EU is subsiding: [2] [https://docs.google.com/spreadsheets/d/1Fa7U6OHyTRZPCWzVFcttuZzffWLQgy-JVqtEAomcqPk/] 6:20 - Analysis based on report published by the European Central Bank on inflation dynamics in the EU and the USA: [1] [https://www.europarl.europa.eu/RegData/etudes/BRIE/2022/729352/EPRS_BRI(2022)729352_EN.pdf] 7:10 - See how Japan’s acute decline in working-age population compares to other developed economies: [27] [https://data.oecd.org/pop/working-age-population.htm] 7:25 - A Japanese newspaper that focuses on the Economy recently discusses how Trade Unions are increasing their expected wage increases given the labour shortage: [9] [https://www.nikkei.com/article/DGKKZO75354680X11C23A0EP0000/] 7:39 - A report with further analysis into how Japan’s export industry has become less competitive with the population trends and currency dynamics: [28] [https://www.jri.co.jp/en/MediaLibrary/file/english/periodical/jrirj/2022/10/makita.pdf] 8:18 - Only mentioned implicitly, but we recommend this report by the Federal Reserve to see the role of markups in driving inflation: [29] [https://www.kansascityfed.org/research/economic-review/how-much-have-record-corporate-profits-contributed-to-recent-inflation/] 9:02 - Article on EU exodus from UK: [30] [https://www.ft.com/content/c837135e-60be-4ec6-ac14-78d500775222] 9:22 - Article on the British Currency Crisis in 2022: [31] [https://www.bloomberg.com/news/articles/2022-12-09/the-pound-went-on-a-wild-ride-close-to-dollar-parity-in-2022] 9:43 - A brief analysis by Bloomberg on how decoupling following Brexit has disproportionately affected the UK economy: [11] [https://www.bloomberg.com/news/articles/2023-06-05/why-is-uk-inflation-so-high-and-when-will-it-fall] 10:36 - Academic paper examining the delay between monetary policy implementation and impact: [32] [https://www.ijcb.org/journal/ijcb13q4a2.htm] 11:19 - Article noting the unprecedentedly aggressive policy tightening done by Central Banks: [33] [https://www.bloomberg.com/news/articles/2022-01-27/fed-sets-stage-for-most-aggressive-global-tightening-in-decades] 12:25 - Research institute analyses the impact of fiscal responses to the pandemic and how it resulted in structural changes in the global economy: [17] [https://cepr.org/voxeu/columns/demand-supply-imbalance-during-covid-19-pandemic-role-fiscal-policy] 12:37 - The IMF’s analysis on how external events such as Russia’s invasion of Ukraine contributed to inflation: [6] [https://www.elibrary.imf.org/view/journals/001/2022/241/article-A001-en.xml] 13:52 - World Bank article on the supply disruption and subsequent inflation in Pakistan following the 2022 floods: [34] [https://www.worldbank.org/en/news/press-release/2022/10/06/world-bank-pakistan-s-economy-slows-down-while-inflation-rises-amid-catastrophic-floods] 14:06 - United Nations highlights the vulnerability of supply from increasing extreme weather events: [35] [https://news.un.org/en/story/2023/07/1138712] 15:52 - Emerging trends of deglobalisation and militarisation are highlighted in this IMF report: [19] [https://www.imf.org/en/Publications/WEO/Issues/2023/10/10/world-economic-outlook-october-2023] Further recommended readings: [13] [https://www.ft.com/content/2c3fc086-b543-4efe-b696-8c84aa919b69]: A further analysis of whether Quantitative Easing, a particularly controversial tool for monetary expansion which was widely used for COVID-era stimulus, contributed to inflation or not. [14] [https://web.archive.org/web/20090719220308/http://www.boj.or.jp/en/type/release/zuiji/kako02/k010319a.htm]: A Bank of Japan report on what Quantitative Easing as a tool is used to address in the Economy (Note: compare it to the state of the global economy in 2020 - is it applicable?) [18] [https://www.imf.org/en/Publications/WP/Issues/2023/08/31/Unconventional-Fiscal-Policy-in-Times-of-High-Inflation-537454]: An assessment of the impact of fiscal policy on the Post-COVID inflation surge References [1]: Höflmayr, M. (2022). Inflation explained: What lies behind and what is ahead? [https://www.europarl.europa.eu/RegData/etudes/BRIE/2022/729352/EPRS_BRI(2022)729352_EN.pdf] [2]: Historical inflation data for the countries of interest, 1971-2023 [https://docs.google.com/spreadsheets/d/1Fa7U6OHyTRZPCWzVFcttuZzffWLQgy-JVqtEAomcqPk/] (All sources and economic data are aggregated in this spreadsheet) [3]: Koranyi, B. & Canepa, F. (2023, June 27). ECB's Lagarde sees no rate peak call near-term. [https://www.reuters.com/markets/rates-bonds/ecbs-lagarde-sees-no-rate-peak-call-near-term-2023-06-27]Reuters [https://www.reuters.com/markets/rates-bonds/ecbs-lagarde-sees-no-rate-peak-call-near-term-2023-06-27]. [https://www.reuters.com/markets/rates-bonds/ecbs-lagarde-sees-no-rate-peak-call-near-term-2023-06-27] [4]: Summers, L. (2021, May 20). Larry Summers Worried About Inflation. [https://www.hks.harvard.edu/centers/mrcbg/programs/growthpolicy/larry-summers-worried-about-inflation-lawrence-summers]Harvard Kennedy School [https://www.hks.harvard.edu/centers/mrcbg/programs/growthpolicy/larry-summers-worried-about-inflation-lawrence-summers] [5]: Schasfoort, J. (2023, September 30). Why Inflation is Coming Down So Fast. Www.youtube.com. [http://www.youtube.com.] [6]: Binici, M., Centorrino, S., Cevik, S., & Gwon, G. (2022). Here comes the change: The role of global and domestic factors in post-pandemic inflation in Europe. 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(2023, March 6). What Is 'Transitory Inflation'? The Facts. Forbes. [https://www.forbes.com/sites/georgecalhoun/2023/03/06/what-is-transitory-inflation-1-the-facts/?sh=3ee7c076156a] [16]: Business Insider. (2023, December 13). Inflation Is Permanent and You'll Never Regain Your Lost Purchasing Power, Says a Wall Street Guru. [https://www.businessinsider.nl/inflation-is-permanent-and-youll-never-regain-your-lost-purchasing-power-says-a-wall-street-guru/] [17]: CEPR. (2022, March 1). Demand-supply imbalance during the COVID-19 pandemic: The role of fiscal policy. VoxEU. [https://cepr.org/voxeu/columns/demand-supply-imbalance-during-covid-19-pandemic-role-fiscal-policy] [18]: Dao, M. C., Dizioli, A., Gourinchas, P. -O., Jackson, C., & Leigh, D. (2023). Unconventional Fiscal Policy in Times of High Inflation. Paper presented at the European Central Bank Forum on Central Banking, Sintra, Portugal, June 25–28. 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[https://data.oecd.org/pop/working-age-population.htm] [28]: Makita, T. (2022). Restoring Japan’s Economic Competitiveness -Regeneration and adaptation to globalization and digitalization is essential. In Japan Research Institute. [https://www.jri.co.jp/en/MediaLibrary/file/english/periodical/jrirj/2022/10/makita.pdf] [29]: Glover, A., Mustre-del-Rio, J., & von Ende-Becker, A. (2023, January 12). How Much Have Record Corporate Profits Contributed to Recent Inflation? Kansascityfed.org. [https://www.kansascityfed.org/research/economic-review/how-much-have-record-corporate-profits-contributed-to-recent-inflation/] [30]: Bounds, A. (2021). Financial Times. FinancialTimes. [https://www.ft.com/content/c837135e-60be-4ec6-ac14-78d500775222] [31]: Tajitsu, N. (2022, December 9). British Pound (GBP/USD) Went on a Wild Ride Close to Dollar Parity in 2022. Bloomberg.com; Bloomberg. [https://www.bloomberg.com/news/articles/2022-12-09/the-pound-went-on-a-wild-ride-close-to-dollar-parity-in-2022] [32]: Tomáš Havránek, & Marek Rusnák. (2012). Transmission Lags of Monetary Policy: A Meta-Analysis. RePEc: Research Papers in Economics, 9(4). [https://www.ijcb.org/journal/ijcb13q4a2.htm] [33]: Aldrick, P. (2022, January 27). Fed Kicks Off Most Aggressive Global Tightening in Decades. Bloomberg.com; Bloomberg. [https://www.bloomberg.com/news/articles/2022-01-27/fed-sets-stage-for-most-aggressive-global-tightening-in-decades] [34]: World Bank Group. (2022, October 6). World Bank: Pakistan’s Economy Slows Down While Inflation Rises Amid Catastrophic Floods. World Bank; World Bank Group. [https://www.worldbank.org/en/news/press-release/2022/10/06/world-bank-pakistan-s-economy-slows-down-while-inflation-rises-amid-catastrophic-floods] [35]:United Nations. (2023, July 14). Extreme weather highlights need for greater climate action. UN News. [https://news.un.org/en/story/2023/07/1138712] This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit aucfundamentalsofmacro.substack.com [https://aucfundamentalsofmacro.substack.com?utm_medium=podcast&utm_campaign=CTA_1]

30 de dic de 202317 min

How does the way the EU/Euro Area is set up influence the fight against inflation?

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