Page 2 sur 8 But what about the Great Financial Crisis, the Pandemic and the Russian war? If, as Olivier Blanchard said in 2006, “monetary policy must be closer to art when it is frequently confronted to new, poorly anticipated and poorly understood, contingencies”, the economic shocks of the past 15 years must surely have shifted the pendulum back to art. i I would actually argue that, even then, science served us well. Let me here cite Olivier Garnier, chief economist of Banque de France. ii I believe we central bankers can be proud of the joint achievements of policy and research in dealing with the Global Financial Crisis and its aftermath: acknowledging common mistakes in forecasts on the current level of inflation doesn’t imply becoming self-critical on policies. In the euro area, thanks to our “new conventional” tools, inflation is estimated in 2019 to have been around 75 basis points higher, and GDP growth 110 basis points higher than it would have been in the counterfactual. iii Furthermore, nobody can seriously pretend that past accommodative policy is the primary factor to blame for the current return of inflation. This would be forgetting how deep the deflation risk was in 2020 and the pandemic, and being mistaken about the present inflation surge: it finds its origins not in excessive liquidity but in supply bottlenecks arising from the fasterthan-expected rebound from the pandemic, and the sharp increase in energy and food prices, much aggravated by the war in Ukraine.
xii Two hundred years later, Bertrand Russell wrote that “not to be absolutely certain [is] one of the essential things in rationality”. xiii I am glad we still need science, including on the new challenges I stressed, to reconcile uncertainty and rationality. Blanchard (2006). Garnier (2022), Presidential Lecture at the French Economic Association. iii Rostagno et al. (2021). iv See Savignac, Gautier, Gorodnichenko and Coibion (2021) for first results on a new survey conducted by the Banque de France on expectations of French firms. v See Coibion Gorodnichenko Kumar (2018), Coibion Gorodnichenko Ropele (2020), and Rosolia (2021) for the few papers that seek to empirically assess the effect of inflation expectations on pricesetting. vi See Werning (2022) for recent advances on these questions from a theoretical perspective. vii Brunner (1981). viii Brainard (1967). ix Dupraz Guilloux-Nefussi Penalver (2020). x See Cukierman (1991) and Stein and Sunderam (2018). xi See Weidmann (2022), Jacobsson Lecture, for a recent articulation of this idea. xii In a letter to Frederick II, King of Prussia, on April 6, 1767. xiii Russell (1947). i  ii