1. I see that my paper with Ben Bernanke on inflation is interpreted in contradictory ways: “BB show that demand played a small role, BB show that there is no reason to worry, etc.” It is clear that we were not clear enough... So here it goes, stated as clearly as I can.
2. (The video is available at https://youtube.com/watch?v=wyaoEC5O7JY). The paper is available at https://brookings.edu/wp-content/uploads/2023/04/Bernanke-Blanchard-conference-draft_5.23.23.pdf )
3. At least until the invasion of Ukraine, US inflation came primarily from too strong aggregate demand, largely due in turn to the large fiscal packages, reinforced by a relative demand shift from services to goods, and by shortages in a number of markets.
4. While the initial worry was that the main channel would be through tensions in the labor market and resulting wage pressure, most of the movements in headline inflation have come from the goods markets, from price shocks, i.e. large increases in some prices given wages.
5. We provide evidence that aggregate demand played a central role in explaining price shocks by focusing on the common component of movements in commodity prices:
6. If one believes that specific commodity markets are characterized by largely common demand and largely idiosyncratic supply, their common component captures aggregate demand. Up to the middle of 2022, this component largely explains the movements in food and energy prices.
7. Evidence for relative demand shifts and adverse sectoral supply shocks comes from evidence from the automobile market, and in our econometric work, from the important role of a measure of shortage in explaining price inflation.
8. While headline inflation has been dominated by price shocks, behind the scene, overheating in the labor market has led to steady pressure on wage inflation, both directly, and through the effect of induced price inflation on expected inflation.
9. Further findings. We find that, contrary to (at least my) initial worries, the wage Phillips curve has remained surprisingly stable. Inflation expectations have reacted to actual inflation, but the effect of inflation has been similar to its value pre-covid.
10. We find evidence of weak second round effects, that is of effects of energy and food prices on other prices and on wages. This reflects strongly anchored expectations, and very limited catch up---limited attempts by workers to be compensated for past real wage losses.
11. Looking forward, as price shocks are likely to fade, the focus will return to the labor market; wage inflation is too high, reflecting overheating and some increase in expectations. We argue that this requires a substantial decrease in the ratio of vacancies to unemployment
12. How much of an increase in unemployment this implies depends on whether the shift in the Beveridge curve triggered by covid reverse or not. If it does, the required increase in unemployment may be limited. If the shift partly remains, the increase will have to be larger.
(ビデオはhttps://youtube.com/watch?v=wyaoEC5O7JY で見られる。論文はhttps://brookings.edu/wp-content/uploads/2023/04/Bernanke-Blanchard-conference-draft_5.23.23.pdf で読める)

*1:ブランシャールはこの連ツイの前のツイートWSJのGreg Ipの論文紹介を賞賛する一方で、「WSJのまとめには偏見があるということで批判するレターを書いたが、この連ツイでそれが裏付けられた」という主旨のChris Oldmanというエコノミスト(自称?)のツイートをこの連ツイの後にRTしている。