Economic outlook – Reverse inflation shock?

For two years, the inflation shock radically changed economic conditions by creating a large transfer of resources between agents. The losers were consumers, whose spending power was weakened, especially in Europe. The winners were businesses, which expanded their margins, and governments, which used their extra tax revenues to go on a fiscal splurge. After initially underestimating the shock, central bankers have now caught up by tightening their monetary policies at lightning s...