In an Economists Exchange published just over a year ago, I discussed the risks of an upsurge in US inflation with Larry Summers, former US Treasury secretary. Summers, a staunch Democrat, criticised the Biden administration for the scale of its fiscal stimulus, which would, he feared, lead to significant overheating and then inflation. Subsequent events apparently vindicated his worries.
Olivier Blanchard is among the world’s most respected macroeconomists. Of French nationality, he has been professor of economics at the Massachusetts Institute of Technology and chief economist of the International Monetary Fund. He is currently a senior fellow at the Peterson Institute for International Economics in Washington, DC.
He was one of the leading figures in the creation of “New Keynesian” economics in the 1980s and 1990s. More recently, he has argued that low long-term interest rates mean that it is safe to run larger fiscal deficits than previously thought.