What We’ve Learned About Inflation by John Cochrane
https://www.wsj.com/articles/what-weve-learned-about-inflation-prices-federal-reserve-borrowing-debt-fiscal-theory-faf66883
https://www.wsj.com/articles/what-weve-learned-about-inflation-prices-federal-reserve-borrowing-debt-fiscal-theory-faf66883
Alan Blinder’s Critique:
https://www.wsj.com/articles/inflation-economics-supply-shock-blinder-cochrane-752a73d8
First, Mr. Cochrane claims, the supply-shock theory is about relative prices (that’s true), and that a rise in some relative price (e.g., energy) “can’t make the price of everything go up.” This is an old argument that monetarists started making a half-century ago, when the energy and food shocks struck. It has been debunked early and often. All that needs to happen is that when energy-related prices rise, many other prices, being sticky downward, don’t fall. That is what happened in the 1970s, 1980s and 2020s.
Second, Mr. Cochrane claims, the supply-shock theory “predicts that the price level, not the inflation rate, will return to where it came from—that any inflation should be followed by a period of deflation.” No. Not unless the prices of the goods afflicted by supply shocks return to the status quo ante and persistent inflation doesn’t creep into other prices. Neither has happened in this episode.
Team Transitory Had a Point About Inflation
by Alan Blinder
https://www.wsj.com/articles/team-transitory-had-a-point-about-inflation-fed-energy-food-cpi-inflation-2c71e184
https://www.wsj.com/articles/inflation-economics-supply-shock-blinder-cochrane-752a73d8
First, Mr. Cochrane claims, the supply-shock theory is about relative prices (that’s true), and that a rise in some relative price (e.g., energy) “can’t make the price of everything go up.” This is an old argument that monetarists started making a half-century ago, when the energy and food shocks struck. It has been debunked early and often. All that needs to happen is that when energy-related prices rise, many other prices, being sticky downward, don’t fall. That is what happened in the 1970s, 1980s and 2020s.
Second, Mr. Cochrane claims, the supply-shock theory “predicts that the price level, not the inflation rate, will return to where it came from—that any inflation should be followed by a period of deflation.” No. Not unless the prices of the goods afflicted by supply shocks return to the status quo ante and persistent inflation doesn’t creep into other prices. Neither has happened in this episode.
https://www.wsj.com/articles/team-transitory-had-a-point-about-inflation-fed-energy-food-cpi-inflation-2c71e184
The Real Inflation Culprits by Daniel Gros
https://www.project-syndicate.org/commentary/central-bank-asset-purchases-contribution-to-inflation-us-eurozone-by-daniel-gros-2023-08
https://www.project-syndicate.org/commentary/central-bank-asset-purchases-contribution-to-inflation-us-eurozone-by-daniel-gros-2023-08
Paul Krugman's Take:
https://www.nytimes.com/2023/07/21/opinion/inflation-federal-reserve.html
https://www.nytimes.com/2023/07/14/opinion/inflation-economists-soft-landing.html
https://www.nytimes.com/2023/08/01/opinion/us-economy-covid-2008.html
https://www.nytimes.com/2023/07/14/opinion/inflation-economists-soft-landing.html
https://www.nytimes.com/2023/08/01/opinion/us-economy-covid-2008.html