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Olivier Blanchard

What Olivier Blanchard thinks about inflation

@olivier-blanchard · 24 positions · 1 change of mind

Economist; former chief economist of the International Monetary Fund.

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4 dated positions, 2022 to 2023, in their own words. Our reading of what Olivier Blanchard has said — not written or endorsed by them.

4 positions so far — this page is not yet offered to search engines.

  1. Our readingThe sharp steepening of the long end of the yield curve in 2023 was not predicted by economists, including forecasters who had modelled persistently low safe rates.

    Their wordsIt is fair to say that, while economists expected the short end of the yield curve to reflect the higher rates needed to win the fight against inflation, the sharply steeper long end of the yield curve in the last few months has come as a surprise. I shall freely admit that I did not predict it.

    ↗If markets are right about long real rates, public debt ratios will increase for some timepiie.com

    economists

    Interesting
  2. 17 months earlier

  3. Our readingCentral bank purchases of government bonds are not bailouts and do not automatically cause inflation, since they only change the composition of the consolidated government's liabilities, not their total.

    Their wordsGovernments have not been bailed out by their central banks. As I discussed earlier, central bank intervention does not reduce the overall liabilities of the consolidated government, just their composition. And it does not automatically lead to more inflation: It increases the size of the balance sheet of the central bank, but it does not increase the size of the non-interest-paying money stock.

    ↗Fiscal Policy under Low Interest Ratesdirect.mit.edu 13th of 22 in this piece

    interest ratesgovernment

    Interesting

  5. Our readingThe price level behaves as the aggregate of mostly backward-looking decisions rather than as an asset price, except during hyperinflation, so expected future primary balances barely affect it today.

    Their wordsI believe that, except in times of hyperinflation, the price level does not behave as an asset price but as the aggregate of billions of mostly backward-looking decisions, and that expectations of future primary balances have little effect on the price level today.

    ↗Fiscal Policy under Low Interest Ratesdirect.mit.edu 16th of 22 in this piece

    Interesting

  7. Our readingJudging by output kept near potential despite weak private demand, Japan's decades of high debt and low inflation reflect a qualified policy success, not failure.

    Their wordsJapanese macroeconomic policy is often characterized as a failure, with the central bank unable to achieve its inflation target, a low growth rate, and debt ratios steadily rising to reach more than 170% for net debt and 250% for gross debt. I think it should be seen instead as a qualified success, with the use of aggressive fiscal and monetary policies to compensate for very weak private demand: Output has remained close to potential.

    ↗Fiscal Policy under Low Interest Ratesdirect.mit.edu 20th of 22 in this piece

    interest ratesJapan

    Interesting