The former chief economist of the International Monetary Fund, who had predicted the return of rising prices in the United States, is rather reassuring.
Interview by Marc Vignaud
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Le Dot: The US economy experienced 7% inflation in December 2021. Does this reflect an error in economic policy?
Olivier Blanchard: Largely, yes. The program introduced in February 2021 was going in the right direction, but much too far. The scale of checks to households and non-reimbursable loans to businesses was too high and had strong effects on the demand for goods and services. There were also good reasons to think that the supply would be limited, because of the Covid and the sanitary measures limiting production. It therefore seemed obvious that the risk of inflation was high.
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MAGNUS HJALMARSON NEIDEMAN/SVD/TT News Agency via AFP
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