Olivier Blanchard is worried that the Biden administration’s proposed $1.9 trillion covid relief bill is too large and risks igniting unwanted inflation.
Blanchard, a Frenchman, is not exactly a household name but he is one of the world’s leading economists. His work is said to be the most cited of any living economist. He was the chief economist at the World Bank from 2008 through 2015. He’s a professor emeritus at MIT and a Senior Fellow at the Peterson Institute for International Economics.
In other words, he’s a big deal among economists, especially liberal establishment economists sympathetic to the Democratic Party. And that makes his critique of Biden’s spending proposal all the more potent.
Blanchard argues that the hole in the economy created by the pandemic—the output gap, as economists say—is much smaller than $1.9 trillion plus the $900 billion authorized in December. In a blogpost for the Peterson Institute, Blanchard