Office of Hale Stewart
Is Inflation Making a Comeback?
The pound is dropping versus the dollar and euro, which may increase import inflation. Recently, Bank of England head Carney publicly stated inflation would run above the bank's 2% target.
EU inflation is at its highest level in 2 years.
Chinese PPI prints its first positive number in 5 years.
What influences productivity over time? The literature on the fundamentals of economic growth tends to focus on three factors. One is the pace of technological development. Productivity improves as new general purpose technologies are introduced and diffuse through the whole economy. Classic examples are the automobile and electricity. The second factor is human capital. The workforce receives better training and a higher level of knowledge over time, both of which help make workers more productive and improve growth over the medium and long run. The third factor is productive public capital. The idea is that government would provide certain types of public capital that would not otherwise be provided by the private sector, such as roads, bridges and airports. This type of public capital can improve private-sector productivity and, therefore, may lead to faster growth.