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Do pandemics normally lead to rising inflation?

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Across much of the world prices are rising at the fastest pace in decades. In America prices leapt by 4.3% in the year to August, according to the Federal Reserve’s preferred measure—a 30-year high. In the euro zone annual inflation hit 3.4% in September, the highest rate in over a decade. Some economists worry that the world economy is entering a period of “stagflation”—weak growth and high inflation—reminiscent of the 1970s.

The Economist today

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That covid-19 might usher in a prolonged spell of high inflation would buck a historical trend. A recent paper by Dennis Bonam and Andra Smadu, two economists at the Dutch central bank, looks at the effect of pandemics on inflation and concludes that they typically lead to lower, not higher, price pressures. Using data going back to the 14th century, covering six European countries and 19 pandemics, the…

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