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CHRONIC. Several techniques can be used to conduct an anti-inflationary policy, each with specificities linked to the economic environment.
By Patrick Artus
© Nicolas Guyonnet/Hans Lucas via AFP
Published on
Lhe problem arises today, in an obvious way, on the most effective way to fight against inflation. First, there is the choice not to conduct an anti-inflationary policy. Then there is that of using, in the traditional way, a restrictive monetary policy or, on the contrary, a restrictive budgetary policy.
Finally, it is possible to put in place a wage restraint policy combined with an expansionary fiscal policy, which replaces wage increases with public transfers.
Japanese model
The first way to fight against inflation is therefore precisely not to fight. This is the Japanese model: neither monetary policy nor fiscal policy becomes more restrictive when inflation appears…
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