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The 2021 surge in inflation: A look at sticky prices | VOX, CEPR Policy Portal

There is disagreement over whether the current inflation is here to stay. This column argues that sticky-price inflation, which focuses on components of the consumer price index with infrequent price changes, is particularly useful at the moment as it can help control for ongoing changes in the relative prices of goods and provides hints about future CPI inflation. In October ....

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US inflation: Set for take-off? | VOX, CEPR Policy Portal


Olivier Blanchard
How high might inflation rise in the US in the coming years? Blanchard (2021) and Summers (2021) caution that the recent $1.9 trillion American Rescue Plan Act (ARPA), together with the fiscal expansion passed in 2020, may push unemployment low enough to cause overheating and surging inflation. Others, such as Gopinath (2021), see a persistent surge in price pressures as unlikely, and Powell (2021) argues that the rise in inflation will be “neither particularly large nor persistent”.
The purpose of this column is two-fold. First, to re-assess how strongly US inflation responds to the unemployment rate, including since the start of the COVID-19 crisis, with a focus on underlying (core) inflation. Second, to predict how high inflation might rise depending on how low unemployment falls with the government spending expansion. ....

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