We are hurtling through autumn and heading into a winter warmed by high-price energy. With consumers tightening their belts, businesses watching their bills rise uncontrollably, and economic outlooks that are – at best – quite bleak, the current situation can be tricky for decision-makers to navigate.

To provide some context, clarity and advice, ERA hosted a public lecture from renowned Portuguese economist Dr Ricardo Reis.

Having earned his Bachelor of Science degree from the London School of Economics and his PhD from Harvard University, Dr Reis also taught at Princeton and Columbia Universities, where he became a full professor at 29 – one of the youngest ever in the history of Columbia.

Considered a rockstar of economics, Dr Ricardo Reis tours on the international lecture circuit, has won the prestigious Germán Bernácer Prize as a top European-born economist researching macroeconomics and finance and has made several contributions to economic discourse.

Those contributions include developing measures for core inflation used by central banks around the world; inventing the concept of central bank insolvency caused by possible losses from quantitative easing programs; and showing that automatic stabilisers can be very effective by reducing the need for precautionary savings at the start of recessions.

Sitting down with ERA’s Executive Director Dr Arnd Halbach, Dr Ricardo Reis began by explaining our current situation. We have enjoyed very low market volatility and an inflation rate that has hovered around a sweet spot of 2%. Looking back through history, those conditions have never been seen before.

We have enjoyed a privileged position, but today inflation is rising quickly, driven by high energy prices.

Implications of an inflated economy:

  1. Workers will demand that wages keep pace.
  2. Debt will be cheaper to restructure (because your loans are not affected by inflation but your income might be).
  3. Paying attention is key: policy decision-makers can have big impacts on inflation persistence.
  4. Governments and central banks will have to wrestle with high inflation. They will likely do so by raising interest rates.

If you tuned in, you would have enjoyed a passionate, insightful and accessible explanation of these things, followed by the economist’s own views on how economic challenges can be solved. When inflation is high, increased interest rates can bring it down. Based on previous eras of high inflation, Dr Ricardo Reis believes the interest rates should be lifted significantly, above the rate of inflation. This would be only temporary because inflation would fall quickly. Interest rates can act as a ceiling above which inflation rates won’t rise.

At the peak of the Portuguese economist’s lecture, 629 attendees tuned in, captivated by his delivery and feverishly making notes on how businesses can beat the challenge of high inflation, workforce shortages and supply chain disruption.

Here’s what some of the attendees thought about the virtual event:

“A phenomenal speaker on such a relevant topic.”

“I was very sceptical. How can macroeconomics impact my business? I was blown away by the practical advice and the scenarios outlined.”

“Sign me up for another of these!”

On-the-pulse information and enthusiastic specialists are what make ERA great. We thoroughly enjoyed hosting Dr Ricardo Reis and appreciate the time he spent with us.

To watch the recorded virtual lecture, click here.

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