Domenico Giannone and I have recently presented our work on "The drivers of post-pandemic inflation" at the ECB Forum on Central Banking in Sintra. Paper: faculty.wcas.northwestern.edu/gep575/DemandD… Video of the presentation: youtu.be/qvhP65obBy0 The paper answers 4 questions:

I am following up on my thread about the "The drivers of post-pandemic inflation," a paper I have written with Domenico Giannone. Here are some of the reactions to the paper, including criticisms:

Criticism #1 is easy to address: Our conclusion holds in more complicated settings, as we carefully document in the paper. And it must be that way, since such conclusion follows from basic supply-demand logic. Therefore, the simplicity of the model is a strength, not a weakness.

In this respect, a nice quote from Georgia O’Keeffe comes to mind (recommended to me a while ago by my friend Paco Buera): “Nothing is less real than realism. Details are confusing. It is only by selection, by elimination, by emphasis, that we get at the real meaning of things”

As for Criticism #2, I actually fully agree with it. Because it is CONSISTENT with our results, NOT in contrast. In fact, our paper stresses that the unusual (relative to pre-covid) CB accommodation of inflationary pressures can be a key factor behind the swift rebound of demand

This is certainly possible. But, again, it simply means that Central Banks might have provided historically unusual accommodation of inflationary pressures, given that the economy was weak. This translates into an unusually strong rebound of aggregate demand—as per our conclusion

1/3 Commodity prices respond to many specific factors affecting supply and demand in individual markets. Global economic activity also plays a big role as the demand for commodities is closely tied to the global business cycle. Domenico Giannone Giorgio Primiceri Chris Giles

2/3 Domenico Giannone Laurent Ferrara and I show in our JAE paper that a common factor - closely link to demand conditions - captures the bulk of commodity price variations, especially since the 2000s. ecb.europa.eu/press/research…

3/3 What does the global factor tell us about the post-pandemic oil price increase? It suggests that the energy shock following the Russian invasion of Ukraine in 2022 was preceded by a boom in global demand for commodities...

SIdE and Luca Fanelli are organizing the 2025 edition of the Italian Congress of Econometrics and Empirical Economics - May 29-31, University of Palermo. Keynote speakers: Paola Sapienza and Domenico Giannone . Info on deadlines/paper submission: side-iea.it/events/iceee/i…

Submissions to the 11th ICEEE 2025, Palermo are now open! Invited speakers: Papla Sapienza (Northwestern) Domenico Giannone (IMF) Chairs of Scientific PC: Mario Forni Luca Gambetti side-iea.it/events/iceee/i…

When Are Central Bank Reserves Ample? By Gara Afonso, Domenico Giannone, Gabriele La Spada, and John C. Williams #CentralBankReserves nyfed.org/4diP4XS

A New Set of Indicators of Reserve Ampleness By Gara Afonso, Kevin Clark, Brian Gowen, Gabriele La Spada, JC Martinez, Jason Miu, and Will Riordan nyfed.org/46NpMyy #CentralBankReserves

New CEPR Discussion Paper - DP19377 The Drivers of Post-Pandemic #Inflation Domenico Giannone Domenico Giannone IMF University of Washington, Giorgio Primiceri Giorgio Primiceri Northwestern Economics Northwestern ow.ly/252E50T23l8 #CEPR_MEF #economics

Post-covid inflation was predominantly driven by unexpectedly strong demand forces. The inflationary impact of adverse supply shocks was less pronounced, even though these shocks significantly constrained economic activity.

The behavior of post-pandemic inflation was nearly identical in the US and the Euro area. In both cases, it was mainly driven by unexpectedly strong demand forces, from Domenico Giannone and Giorgio Primiceri nber.org/papers/w32859