The resurgence of inflation in 2021 was like the rumblings of a volcano that had been dormant for four decades. That means most active researchers and decision makers had no personal familiarity with the messy politics of the issue. Economists had read about it, and studied data and events from other countries, but for the most part hadn’t lived it. Political leaders could dust off old sound-bites, but hadn’t felt public reaction to them.
Prices go up and down all the time, for many reasons. To an economist, inflation is different, it’s a general increase in prices, which can be defined equivalently as a decline in the value of money. Inflation is a macroeconomic phenomenon with complex relations to other macroeconomic variables like economic growth, unemployment and interest rates.
Read Full Article »
