Cost-Push vs Demand-Pull: A Modern Reassessment
The cost-push vs demand-pull framework still organizes inflation discussions, but modern episodes mix both forces. Expectations and markups complicate the...
Author: Majid Ali Sanghro
Inflation Persistence: Why Past Inflation Drives Future Inflation
Inflation persistence measures how strongly past inflation drives future inflation. It collapsed after the Volcker disinflation and rebounded modestly during...
Sacrifice Ratio: Output Cost of Disinflation
The sacrifice ratio measures the output lost per percentage point of inflation reduction. The 1980s episodes produced ratios near 1.5;...
Wage-Price Spirals: Theory, Evidence, 1970s vs 2022
Wage-price spirals require wage indexation, weak monetary anchors, and unanchored expectations. The 1970s satisfied all three; 2022 did not. The...
The Taylor Rule Reaction Function: Estimation and Limitations
The Taylor rule reaction function estimates how central banks respond to inflation and slack, but data timing, identification, and regime...
FX Intervention Sterilization: How Central Banks Move Currencies
FX intervention sterilization lets a central bank move its currency through balance-sheet operations without changing domestic interest rates, with effectiveness...
Fiscal Dominance: When Government Debt Constrains Monetary Policy
Fiscal dominance describes the configuration in which government debt and deficits constrain a central bank's ability to use interest rates...
Central Bank Swap Lines: Global Dollar Backstop
Central bank swap lines are the Federal Reserve's primary crisis backstop for the offshore dollar system, used at scale in...
Ample Reserves vs Scarce Reserves: Reserve Regimes Compared
The choice between ample reserves vs scarce reserves shapes how the Fed sets the policy rate, runs its balance sheet,...
Generalized Method of Moments: Unified Estimation Framework
The generalized method of moments turns model-implied orthogonality conditions into a unified estimation framework that nests OLS, instrumental variables, and...