Well, theoretically there is a scenario that would give us inflation — if the supply shock effects hang around while the demand stimulus takes off. But somehow I can’t see that actually happening. I think weak export demand, plus lack of business fixed investment, plus precautionary saving on the part of consumers will keep aggregate demand in check.

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Economist, Senior Fellow at Niskanen Center, Yale Ph.D. Interests include environment, health care policy, social safety net, economic freedom.

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