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If second-round effects can be avoided through the necessary agreements, monetary and fiscal policy could still have sufficient room for maneuver to navigate its way through stagflation scenarios, and provide redistributive measures to minimize the impoverishment caused by the Ukraine war.
In the past few months the focus of debate on the global outlook has shifted from the economic impact of the pandemic to how value-chain bottlenecks could affect production and inflation.
Persistent inflationary pressures in recent months in the United States and to a lesser extent in Europe and the slowdown in activity indicators raise fears that in the most extreme scenarios the world economy is heading toward stagflation remi…
