On Friday’s broadcast of Bloomberg Markets, Austan Goolsbee, a professor of economics at the University of Chicago Booth School of Business who served as chairman of the Council of Economic Advisers under President Barack Obama , said the Inflation Reduction Act and CHIPS Act will have a “relatively modest” impact on immediate inflation.
Co-host Alix Steel asked, [relevant exchange begins around 41:55] “If we look at the supply side of the whole inflation debate and if the supply side and the COVID shocks resolve soon, can the CHIPS Act and the Inflation Reduction Act significantly help with that? ?”
Goolsbee replied, “In the short term, I don’t think much. And you’ve seen analysis from several of the major private forecasting firms as well as the CBO say that these are marginal impacts on short-term inflation. Because inflation is kind of a six to twelve month phenomenon and almost all the money and investments in these things would be spread out over five years, ten years. So I think the impact on immediate inflation will be relatively modest. However, there are certain categories, like prescription drugs, that if they start negotiating drug prices, and you could lower the price of certain drugs, you would see significant reductions in inflation for those categories. But it’s different from the economy as a whole.
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