For example, at the start of the 1970s, in the wake of the demographic explosion and the related exponential growth in consumption, the simulations produced for the project of the Club of Rome on the ‘Predicament of Mankind’ set off an alarm which resonated strongly at international level concerning the risks to the survival of our ecosystems and of the human race itself.
However, certain specific shocks and the responses to them may be associated with considerably higher pass-through than indicated by these average relationships. For example, as I will illustrate later, a shock to desired portfolio holdings that causes the dollar to depreciate could, in principle, push up inflation for a sustained period, even if it had little influence on longer-term inflation expectations.