Comparing Past and Present Inflation

Bolhuis, Marijn; Cramer, Judd; Summers, Lawrence H.

doi:10.1093/rof/rfac047

Cited by 8 publications

(4 citation statements)

References 13 publications

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“…Core inflation, which is an important branch of inflation research, refers to trending increases in price level (Eckstein, 1981;Richter et al, 2019;Bernanke, 2020;Hazell et al, 2022). Besides overcoming the shortcomings of excessively volatile and frequent fluctuations in headline inflation indicators such as the CPI, it thereby captures the long-term trending changes in price level (Forbes, 2019;Bolhuis et al, 2022;Giri, 2022), which offers a reasonable guidance for public expectations and reduction of monetary policy implementation costs. The remaining section will review the literature of core inflation measurement and application according to timeline.…”

Section: Literature Reviewmentioning

confidence: 99%

Solving the Puzzle of China’s Low Inflation: A New Perspective From Sectoral Core Inflation Fluctuations

Liu,

Xu,

Song

et al. 2024

Technological and Economic Development of Economy

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China’s constantly rapid economic growth accompanying by a low overall inflation has long been mysterious in macroeconomics. The core purpose of this paper is to solve this puzzle. Therefore, we integrate overdetermined set of equations into a MUCSVO model to explore the volatility mechanism of the overall inflation from a sectoral perspective. Our key findings include: 1) the hedging effect of sectoral inflation fluctuations principally accounts for China’s long-run stable overall inflation; 2) the main contradiction of China’s inflation has been shifting from high price levels in the traditional food and residence categories to rising prices in the health care category; 3) as the proportions of inflation in the food and residence categories fall steadily, sectoral inflation weights become more evenly distributed. In conclusion, China’s overall inflation and deflation will be much less likely to occur, while inflation is still of sectoral imbalance. Unusual price fluctuations in the food and health care categories, which are highly relevant to basic living standards of the low-income group, deserve close attention in particular. Overall, besides solving the puzzle of China’s low inflation, our model is applicable to economies that do not publish inflation weights, which is a useful extension of core inflation measurement.

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Section: Literature Reviewmentioning

confidence: 99%

Solving the Puzzle of China’s Low Inflation: A New Perspective From Sectoral Core Inflation Fluctuations

Liu,

Xu,

Song

et al. 2024

Technological and Economic Development of Economy

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“…We still need to analyze the development (variable V), i.e., the velocity of money from relation (1). In Chart 4, we observe the instability of the money circulation rate of the monetary aggregate M1.…”

Section: Fig 2 Us Monthly Real Gdp and Nominal Gdpmentioning

confidence: 99%

Post-Pandemic Sources of Inflation Dynamics in USA and Europe

Štieber

2023

EDAMBA 2022: Conference Proceedings

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In the context of so-called Great Moderation of the last decades characterized by relatively low and stable inflation rates are the post-pandemic inflation rates of late 2021 and early 2022 relatively elevated. Economic theory and intuition points to the set of inflation dynamic drivers of the real and possibly monetary character. The high inflation rates have negative economic and social consequences; however, the sources of inflation dynamic determine the adequate monetary policies. The goal of this paper is to analyze theoretically sources of inflation dynamics as the set of real and monetary variables It seems that on the real side are inflation drivers in USA and Europe of similar nature, on the contrary on the monetary side. The crucial distinction between the inflation dynamics caused by monetary factors in USA and Europe is the extent of QE program and the transmission of the program. Therefore, we conclude that it is plausible, that post-pandemic inflation dynamic in Europe is mainly driven by raising energy and food prices, whereas in USA also with fiscal over-expansion, however more rigorous analysis is needed to take stated conclusion as factual.

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“…of housing in the CPI before 1982, which distorts inflation measurement relative to current practice when interest rates are volatile (Bolhuis, Cramer, and Summers 2022). In any case, we do not analyze this period further in this paper.…”

Section: Iib the Effects Of Labor Market Tightness As Measured By V/umentioning

confidence: 99%

Understanding US Inflation during the COVID-19 Era

Ball¹,

Leigh²,

Mishra³

2022

eca

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This paper analyzes the dramatic rise in US inflation since 2020, which we decompose into a rise in core inflation as measured by the weighted median inflation rate and deviations of headline inflation from core. We explain the rise in core inflation with two factors: the tightening of the labor market as captured by the ratio of job vacancies to unemployment, and the pass-through into core inflation from past shocks to headline inflation. The headline shocks themselves are explained largely by increases in energy prices and by supply chain problems as captured by backlogs of orders for goods and services. Looking forward, we simulate the future path of inflation for alternative paths of the unemployment rate, focusing on the projections of Federal Reserve policymakers in which unemployment rises only modestly to 4.4 percent. We find that this unemployment path returns inflation to near the Federal Reserve's target only under optimistic assumptions about both inflation expectations and the Beveridge curve relating the unemployment and vacancy rates. Under less benign assumptions about these factors, the inflation rate remains well above target unless unemployment rises by more than the Federal Reserve projects.

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Comparing Past and Present Inflation

Cited by 8 publications

References 13 publications

Solving the Puzzle of China’s Low Inflation: A New Perspective From Sectoral Core Inflation Fluctuations

Solving the Puzzle of China’s Low Inflation: A New Perspective From Sectoral Core Inflation Fluctuations

Post-Pandemic Sources of Inflation Dynamics in USA and Europe

Understanding US Inflation during the COVID-19 Era

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