Two economic papers presented at the ECB forum in Sintra drew criticism for their questionable conclusions on the causes of inflation.
The first paper attributed inflation primarily to demand shocks, contradicting widely held views and empirical evidence pointing to significant supply-side factors.
The second paper, while offering valuable insights into past interest rate cycles, used the same flawed methodology and also arrived at implausible results.
Another paper, analyzing geopolitical shocks and inflation, underestimated the impact of the Russian invasion of Ukraine on global inflation. The UK’s new chancellor, Rachel Reeves, faces a challenging economic landscape, as indicated by a chart showing the UK’s unfavorable economic indicators compared to 1997.