How to deal with stagflation

Newsletter: How to deal with stagflation
Tuesday, 5 July 2022

Funcas Europe

Hello Future is blue readers,

The risk of stagflation is turning into quite a headache for policymakers.

Back in the 70s developed economies were particularly hit by rising prices and low economic growth. There were two oil crises, currency turmoil and rising unemployment. Inflation reached 15% in the US in 1980.

There are thus some similarities - and also some major differences - with today's outlook. To learn from the lessons of the past and to understand what's really at stake here, we have invited to our latest podcast episode LSE Professor Iain Begg, who recently published Stagflation: the return of an unwelcome monster. More info below on this interview that was conducted by Future is blue host Carlos Carnicero Urabayen.

At the end you can see as usual some of the readings that are capturing our attention these days.

New podcast available!

In our podcast episode with Iain Begg we touch on a number of questions related to the challenge of stagflation, including: why it's so difficult for policymakers and central banks to get it right dealing with it, how energy transition can help to deal with this problem and why reducing dependency from Russian oil and gas is so urgent these days.

Access our new podcast!

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What we are reading

Stagflation: the return of an unwelcome monster
Great complement to our latest podcast episode. Don't miss this piece by Iain Begg.

The implications for public debt of high inflation and monetary tightening
Expected increases in interest rates and reductions in real GDP growth rates will result in relatively small increases in public debt-to-GDP ratios, but inflation will reduce debt ratios very substantially, argues Zsolt Darvas from Bruegel.

What progress is the EU making on ending its reliance on Russian energy?
Good overview of what the EU has promised in this area and what it's already doing.

Have a nice rest of the week.

Raymond Torres
Funcas Europe Director


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