The causes of and responses to today’s inflation
分析认为当前通胀主要由疫情和战争导致的供给侧冲击引起，而非需求过剩；加息效果有限，应转向财政等替代措施以兼顾长期福利。
Abstract Over the last couple years, the world has experienced the highest levels of inflation in more than four decades. This paper provides a framework for analyzing the causes and the appropriate responses. We show that it is not caused by an excess of aggregate demand, and in particular, not caused by any excess consumption arising from excessive pandemic spending, but by supply-side shocks, largely induced by the pandemic (e.g., chips), and also by the war in Ukraine, combined with sectoral demand shifts. We analyze the role played by market power and the lack of resilience. Increases in interest rates, beyond normalizing levels, will do little to address the underlying problems and may exacerbate them, impeding effective responses to supply shortages. The paper describes alternative fiscal and other measures that, while addressing current inflation, have further long-term welfare benefits.