New topic for participation assignment (Packback
Assignment #2)
Х
Carlos Yepez posted on Feb 18, 2022 10:49 AM •
Edited
Hi
The topic for the second packback assignment (question & answer) is: Canadian
Inflation in 2022
Due: Thursday March 3rd @ 6:00pm
Should you have any packback support questions, email: [email protected]
Across the world, countries are currently experiencing supply chain bottlenecks and
labour shortages, which combined with robust demand for goods and services has
resulted in large inflation spikes.
Central banks in rich countries -including the Bank of Canada- have been cautious
to use monetary policy in the wake of high inflation. Yet, central banks in poor
countries have already started to withdraw stimulus by raising rates to fight
inflation.
Questions to ponder:
• Do you think the latter approach by poor countries is appropriate?
• If so, why haven’t rich countries taken a similar approach?
• What are the advantages and disadvantages of raising interest rates quickly?
#inflation #monetary_policy #developing countries #rich_countries
Source: https://www.ft.com/content/b859fbbc-5492-4d9e-9b22-
bc1a4cf4dd100
1:06 AM, 1/21/2022
+ Add Response
How should central banks in poor countries
respond to rising inflation in the midst of the
ongoing pandemic?
Context:
The IMF and the World Bank have recently warned about how the ongoing
pandemic has deepened the large inequalities between rich and poor nations (see
FT article citation).
A “two track” economic recovery:
More concerning, the scarring effect of the pandemic on poor countries may even
become permanent as this YouTube video panel presentation suggests (“Two-
Speed Global Recovery: the Dangers of a Widening Rich-Poor Gap”. Date: 11.16.21.
Source: Bloomberg New Economy. Accessed: 1.20.2022.)
Macroeconomic policy responses:
While rich countries -aided by high vaccination rates- have used a generous mix of
monetary and fiscal policies to prop their economic recoveries, most poor countries
-plagued by low vaccination rates- have been constrained by the use of traditional
monetary policy tools and tighter fiscal spaces.
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