COVID-19 & MMT: A Recipe for Inflation?
August 2020
The institutional response to COVID-19 has lifted the hood on the direction in which the nexus between fiscal policy and monetary policy may be heading.
In this month’s feature article, we build on our discussion on the ongoing push towards MMT by governments and central banks. MMT sends shivers down the spines of mainstream economists due to the fear that excessive money printing will lead to runaway inflation in the medium to long term. This is not a foregone conclusion under MMT, so we explore the short-term and medium-term inflation outlook, caused by both the current economic environment and the fiscal and monetary response to COVID-19.
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