A greener economy won’t lead to 1970s-style inflation
The transition to a greener economy through changes in government climate policy, technology, investment, and consumer preferences will fuel huge demand for key raw materials and may create inflationary threats in the economy.
However, given the decreasing role of commodities in determining inflation over the past few decades, the expected supply response to currently elevated commodity prices, and generally well anchored inflation expectations, a shift to persistently higher inflation via this channel is unlikely in the near-term.
What you will learn:
- Pandemic supply constraints and financial speculation are also at play
- Over the next few years, green commodities are also likely to reflect a fraction of commodity consumption
- Also, several factors that have led commodities to play a smaller role in the economy
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