Currently, rising energy and food prices are accelerating inflation. The ECB is under pressure to keep interest rates under control due to the stability of the fiscal and fiscal policies of some Member States. These targets may run counter to the objective of price stability, the report notes. “It’s risky to bet that this is just a one-off, temporary price increase,” says Harold James From Princeton University. Rising inflation will take root, he adds, as price expectations adjust and the negotiating parties price higher inflation.
The coronavirus pandemic and the Russian invasion of Ukraine have led to a shortage of energy and many other goods. “The stagflation scenario is threatening. Therefore, governments’ fiscal and monetary policies need to focus more on containing public debt and fighting inflation, “adds Jan-Egbert Sturm KOF from the Swiss Economic Institute ETH in Zurich. “With major investment in green and digital change coming in and defense spending rising, this is a big challenge,” he points out. Cecilia García-PeñalosaProfessor at the Aix-Marseille School of Economics.
The European Economic Advisory Group (EEAG) was set up in 2001. The EEAG is made up of six economists from six countries. Supported by the Ifo Institute, it provides an annual report on the European economy, including growth forecasts and other current European themes.
The EEAG consists of six economists from six countries. This year the chair is Torben Andersen (University of Aarhus). The other members are Giuseppe Bertola (University of Turin), Cecilia García-Peñalosa (University of Aix-Marseille), Harold James (University of Princeton), Jan-Egbert Sturm (KOF and ETH Zurich) and Clemens Fuest (ifo Institute and Ludwig-Maximilians-Universität, Munich).
Report “Economic Policy for the Next Decade: A Changed Role for Governments?” can be found here.
Source: ifo Institute
Source: The Nordic Page