Sunday, January 15, 2023

Inflation in Europe - The Second Round Effect

A podcast transcript with Phillip Lane, the European's Central Bank Chief Economist. Excerpt below:

"...So I think there are differences between, if you like, demand-dominated inflation and supply-dominated inflation. But there are also commonalities. The commonality is no matter where the inflation comes from, if inflation is high, there's a risk of what we call second-round effects: that high inflation this year will lead to, whether firms trying to raise prices next year, workers looking for higher than normal wage increases..." 





Image credit: World Economic Forum

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Oppenheimer and Oscar Economics

This  article  is quite long, but has important modern implications.  Source: Michael Ramirez, The Gazette.