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Sunday, March 20, 2016

'The Fear Factor in Global Markets?'

Brad DeLong:

Must Read: Ken Rogoff: The Fear Factor in Global Markets: This by the very-sharp Ken Rogoff seems to me to be simply wrong. If "the supply side, not lack of demand, is the real constraint in advanced economies" then we would live in a world in which inflation would be on a relatively-rapid upswing right now. Instead, we live in a world in which Global North central banks are persistently and continually failing to meet their rather-modest targets for inflation. If a fear of supply disruptions or supply lack were ruling markets, then people in markets would be heavily betting on an upsurge of inflation and we would see that. But we don't. What am I missing here?

The Fear Factor in Global Markets: "There are some parallels between today’s unease and market sentiment in the decade after World War II...

Of all the weaknesses revealed by the financial crisis, policy paralysis has been the most profound. Some say that governments did not do enough to stoke demand. Although that is true, it is not the whole story. The biggest problem burdening the world today is most countries’ abject failure to implement structural reforms. With productivity growth at least temporarily stuck in low gear, and global population in long-term decline, the supply side, not lack of demand, is the real constraint in advanced economies...

    Posted by on Sunday, March 20, 2016 at 07:12 PM in Economics | Permalink  Comments (6)


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