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The post-covid inflation episode

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Abstract

The recent inflation episode has been examined in an estimated New Keynesian model. The rise of US price inflation resulted from a combination of price-push shocks (45%), wage-push shocks (24%), expansionary monetary policy shocks (21%) and shocks that reduced the labor force (9%). On the projections of the disinflation path, results indicate that if either prices or wages are further indexed to lagged inflation, wage inflation will be higher and the price disinflation will slow down. Also, a severe tightening of Fed's monetary policy will barely reduce inflation at the cost of higher unemployment.

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  • Idoia Aguirre & Miguel Casares, 2023. "The post-covid inflation episode," Documentos de Trabajo - Lan Gaiak Departamento de Economía - Universidad Pública de Navarra 2301, Departamento de Economía - Universidad Pública de Navarra.
    • Handle: RePEc:nav:ecupna:2301
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    Cited by:

    1. António Afonso & José Alves & João Jalles & Sofia Monteiro, 2024. "Inflation Tales: The Heterogenous Price Effects from Current Account Dynamics," CESifo Working Paper Series 11512, CESifo.

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    More about this item

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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