2023年3月6日月曜日

2023/01/20 Isabella Weber On a New Way to Think About Inflation - Bloomberg

参考:
イザベラ・ウェーバー Whither Inflation? - Round Table I 2022/12/07
https://love-and-theft-2014.blogspot.com/2022/12/whither-inflation-round-table-i20221207.html

2022/05/19 ケルトンPodcast: Stephanie Kelton on MMT and the Inflation We're Seeing Today - Bloomberg



Systemically Significant Prices Robert C. Hockett
Cornell Law School, Robert-Hockett@lawschool.cornell.edu Saule T. Omarova
Cornell Law School, sto24@cornell.edu
Faculty Scholarship


2023/01/20 Isabella Weber On a New Way to Think About Inflation - Bloomberg



2022 
Inflation  in Times of  Overlapping Emergencies: Systemically Significant  Prices from an Input-output  Perspective
 Isabella M. Weber 
Economics Department, University of Massachusetts  Amherst 
Jesus Lara Jauregui 
University of Massachusetts  Amherst 
Lucas Teixeira 
University of Campinas,  Brazil 
Luiza Nassif Pires 
University of São Paulo, Brazil 



Inflation  in Times of  Overlapping Emergencies: Systemically Significant  Prices from an Input-output  Perspective
2022
 Isabella M. Weber 
Jesus Lara Jauregui 
Lucas Teixeira 
Luiza Nassif Pires 
https://scholarworks.umass.edu/econ_workingpaper/340/






(2) Isabella Weber on a New Way to Think About Inflation | Odd Lots Podcast - YouTube


ーーー


Tracy: (21:20)
So once you've identified these systemically important industries, you know, these ubiquitous industries for inflation, things like basic necessities, housing, farms, food and utilities and energy, how does that inform the policy response?

Isabella: (21:39)
Yeah, so the idea here is that because these sectors are so important that if there are large price movements in these sectors that this has implications way beyond these specific sectors. We should be paying more attention to what is happening in these sectors. So the first implication is to say we need more monitoring capacity.

Why do we need more monitoring capacity? Because we are living in some sort of an age of overlapping emergencies, right? Where we have of course, a pandemic that is not over -- looking for example at what's happening in China and how this impacts global production networks -- but also looking at climate change and your great episode on the Mississippi River and how this is kind of just making a whole sector -- in this case, of course, grain and other commodities -- grind to a halt. But we also have these massive geopolitical tensions that can have huge implications for the ways in which production is organized globally.

So, in other words, it seems very likely from my perspective that more shocks will be in the pipeline. Of course, no one wants these shocks, and everybody is hoping that things will be calm and stable. But from the perspective of the dynamics of overlapping emergencies, even if inflation is now easing it seems like in the next couple of years, these kind of shocks are likely to keep coming. So if that is the case, you kind of want to have capacity on the side of the state to be able to monitor these sectors that are so important, in ways that allow you to react to these shocks before they kind of create these huge cascading effects throughout the whole economy and 

you then actually get some sort of potentially more generalized kind of inflation.

Beyond monitoring capacity, of course it's not enough to watch. You want to be able to kind of step in and stabilize, right? And here then, I think the big shift in, in policy thinking that emerges from this paper is that once we go on the sectoral level, we kind of leave the world of more or less homogeneous aggregates where we can talk about interest rates up by 1% or down by 1% or 0.5 or 0.75 or whatever. But it's pretty one dimensional, right? And pretty clear that there's one dimension that we can measure in very clear ways, quantitatively in percentage points, very straightforward. If we now think about the prices of chemicals or the stability of the flow of goods and wholesale trade, and therefore the prices attached to wholesale trade or the prices of commodities, we enter the word of qualitative differences, right?

We enter the world of the last two years of Odd Lots episodes, right? Where you have been unpacking this incredible amount of detail on the qualitative differences that have huge quantitative implications for pricing but that require quite an extraordinary extent of understanding of the specifics of these sectors. So to be able to react to shocks in these sectors, I think one would really need quite a bit of capacity that is quite tailored to these sectors. So there's no kind of one solution that does it all. If you think about housing versus oil refineries, you would obviously need a very different kind of policy approach, right? So this then means that kind of these, and I mean, there is a lot of capacity out there, but it needs to be connected back to the question of macroeconomic and monetary stability.


https://vt.tiktok.com/ZS8QHPdhM/


そうすると、ある種の一般化されたインフレになる可能性があります。

監視能力を超えて、もちろん監視するだけでは十分ではありません。介入して安定化させることができればいいわけです。この論文から見えてくる政策思考の大きな変化は、セクターレベルになると、金利を1%上げるとか下げるとか、0.5とか0.75とか、そういう話ができる、多かれ少なかれ均質な集合体の世界を離れることになる、ということです。しかし、それはかなり一次元的な話ですよね?そして、非常に明確な方法で、定量的に、パーセンテージ・ポイントで、非常にわかりやすく測定することができる一つの次元があることは明らかです。化学物質の価格や、商品の流れの安定性、卸売業、つまり卸売業に付随する価格や商品の価格について考えてみると、質的差異という言葉に入りますよね?

この2年間の「Odd Lots」のエピソードの世界に入っていくわけですね。このような質的な違いは、価格設定に大きな量的な影響を与えますが、これらのセクターの特殊性を非常によく理解していることが必要なのです。ですから、これらのセクターのショックに対応するためには、これらのセクターに特化したキャパシティが必要だと思います。つまり、1つのソリューションですべてを解決することはできないのです。住宅と石油精製を比較した場合、明らかに異なる種類の政策アプローチが必要になりますよね?つまり、これらの分野には多くの能力がありますが、それをマクロ経済や金融の安定という問題に結びつけて考える必要があるのです。


トレイシー:(21:20)

システム的に重要な産業、つまりインフレを引き起こすユビキタス産業、例えば生活必需品、住宅、農場、食料、公共事業、エネルギーといったものを特定したら、それをどのように政策対応に反映させるのでしょうか。


イザベラ: (21:39)

つまり、これらのセクターは非常に重要であるため、これらのセクターで大きな値動きがあれば、それは特定のセクターをはるかに超える影響を及ぼすということです。私たちは、これらのセクターで何が起きているのか、もっと注意を払うべきなのです。つまり、第一の意味は、より多くの監視能力が必要であるということです。


なぜ監視能力を高める必要があるのでしょうか?なぜなら、私たちは緊急事態が重なり合う時代に生きているからです。もちろん、パンデミックは終わっていませんが、例えば中国で起きていること、そしてそれが世界の生産ネットワークにどのような影響を与えるかを見てみると、気候変動やミシシッピ川での素晴らしいエピソードを見て、これがある分野全体(この場合はもちろん、穀物やその他の商品)を停止させるようなものであることもわかります。また、地政学的な緊張は、世界的な生産体制のあり方に大きな影響を与える可能性があります。


つまり、私の目から見ると、さらなるショックが待ち受けている可能性が非常に高いのです。もちろん、誰もこのようなショックを望んでいるわけではありませんし、誰もが物事が落ち着いて安定することを望んでいます。しかし、緊急事態が重なる力学の観点からすると、たとえ今インフレが緩和しているとしても、今後数年間はこの種のショックが続く可能性が高いように思います。そうであれば、経済全体に大きな連鎖的な影響を及ぼし、より一般的なインフレになる前に、ショックに対応できるような方法で、重要なセクターを監視できる能力を国家側に持たせたいのです。


監視能力を超えて、もちろん監視するだけでは十分ではありません。監視するだけでは不十分で、介入して安定化させることが必要です。この論文から見えてくる政策思考の大きな変化は、セクターレベルになると、金利を1%上げるとか下げるとか、0.5とか0.75とか、そういう話ができる、多かれ少なかれ均質な集合体の世界を離れるということだと思います。しかし、それはかなり一次元的な話ですよね?そして、非常に明確な方法で、定量的に、パーセンテージ・ポイントで、非常にわかりやすく測定することができる一つの次元があることは明らかです。化学物質の価格や、商品の流れの安定性、卸売業、つまり卸売業に付随する価格や商品の価格について考えてみると、質的差異という言葉に入りますよね?


この2年間の「Odd Lots」のエピソードの世界に入っていくわけですね。このような質的な違いは、価格設定に大きな量的な影響を与えますが、これらのセクターの特殊性を非常によく理解していることが必要なのです。ですから、これらのセクターのショックに対応するためには、これらのセクターに特化したキャパシティが必要だと思います。つまり、1つのソリューションですべてを解決することはできないのです。住宅と石油精製を比較した場合、明らかに異なる種類の政策アプローチが必要になりますよね?つまり、これらの分野には多くの能力がありますが、それをマクロ経済や金融の安定という問題に結びつけて考える必要があるのです。


トレーシー: (21:20)
これらのシステム上重要な産業を特定したら、ご存知のように、これらのどこにでもあるインフレーション産業、基本的な必需品、住宅、農場、食品、公益事業、エネルギーなどを特定すると、それは政策対応にどのように影響するのでしょうか?

Isabella: (21:39)
ええ、ここでの考え方は、これらのセクターが非常に重要であるため、これらのセクターに大きな価格変動がある場合、これらの特定のセクターをはるかに超えた意味を持つということです. これらの分野で何が起きているのか、私たちはもっと注意を払うべきです。したがって、最初の意味は、より多くの監視能力が必要であるということです。

より多くの監視容量が必要なのはなぜですか? 私たちはある種の緊急事態が重なる時代に生きているからですよね?もちろん、パンデミックはまだ終わっていません。たとえば、中国で何が起こっているのか、これが世界の生産ネットワークにどのような影響を与えているのかを見てみましょう。しかし、気候変動やミシシッピ川でのあなたの素晴らしいエピソード、そしてこれがいかに親切であるかにも注目しています。セクター全体(この場合はもちろん、穀物やその他の商品)を停止させるだけです。しかし、私たちはこれらの大きな地政学的緊張も抱えており、生産が世界的に組織化される方法に大きな影響を与える可能性があります.

言い換えれば、私の観点からは、パイプラインにさらにショックが発生する可能性が非常に高いようです. もちろん、誰もこうしたショックを望んでおらず、誰もが物事が落ち着いて安定することを望んでいます。しかし、重複する緊急事態のダイナミクスの観点からは、インフレが現在緩和されているとしても、今後数年間はこの種のショックが続く可能性が高い. もしそうなら、国家側に非常に重要なこれらのセクターを監視できる能力を持たせたいと思います。これらのショックがこれらの巨大なカスケードを作成する前に、これらのショックに対応できるようにする方法です。経済全体に影響を及ぼし、実際には、より一般化された可能性のあるある種のインフレが発生します。

もちろん、監視能力を超えて、見るだけでは十分ではありません。あなたは、介入して安定させたいと思っていますよね?そしてここで、この論文から出てきた政策思考の大きな変化は、部門レベルに移行すると、多かれ少なかれ均質な集計の世界から離れ、金利の上昇について話すことができるということです。 1% または 1% または 0.5 または 0.75 または何でも。しかし、それはかなり一次元ですよね?そして、非常に明確な方法で、定量的にパーセンテージポイントで、非常に簡単に測定できる1つの次元があることは明らかです. ここで、化学品の価格や、物の流れや卸売りの安定性、ひいては卸売りに付随する価格や商品の価格を考えると、質的な違いという言葉に入りますよね?

過去2年間のオッドロットエピソードの世界に入りますよね?価格設定に大きな定量的影響を与えるが、これらのセクターの詳細について非常に驚くべき範囲の理解を必要とする質的な違いについて、この信じられないほどの詳細を解き明かしてきました。したがって、これらのセクターのショックに対応できるようにするには、これらのセクターに合わせて調整されたかなりの容量が本当に必要になると思います。そのため、すべてを実行する 1 つのソリューションはありません。住宅と製油所を比較すると、非常に異なる種類の政策アプローチが必要になることは明らかですよね? つまり、これはそのようなことを意味し、そこには多くのキャパシティがありますが、マクロ経済と通貨の安定性の問題に結び付ける必要があります。


23:20~
 
Isabella Weber On a New Way to Think About Inflation - Bloomberg


Isabella Weber On a New Way to Think About Inflation

In economics, there tends to be two dominant ways of thinking about inflation. Either you agree with Milton Friedman, who described inflation as always and everywhere a monetary phenomenon (the result of too much money printing). Or you're more of a New Keynesian who thinks that higher prices are all about the relationship between demand and capacity. In a new paper inspired by Odd Lots and the series of disruptions that have rocked the economy since the global pandemic, UMass Amherst Economics Professor Isabella Weber describes a potential third way of thinking about inflation. She identifies systemically significant sources of inflation, or industries that could end up having a broader impact on a wide variety of prices. The hope is that by identifying these important sources of inflation early, policymakers can put in place measures to make sure price increases don't get out of hand. 


   You then actually get some sort of potentially more generalized  kind of inflation Beyond  monitoring capacity, of course not enough to  watch you want to be able to kind of step in and  stabilize right? And here then I  think the the big shift in policy  think that emergence from this paper  is that once we go on the  sector or lab be kind of leave the word of  more or less homogeneous Aggregates where we can talk about interest rates up and one percent  or down by one percent or point five or point seven five or  whatever, but it's like pretty one dimension  right clear that there's like one dimension  that we can measure very clear ways quantitatively in  percentage points, very straightforward if  we now think about The price is of chemicals or the stability  of the flow of goods and  wholesale trade and therefore the the prices attached to  Jose trade or the prices of Commodities. 

We enter the word of qualitative differences, right  the end of the word of the the last  two years of  odd Lots episodes right where you have  been unpacking this incredible amount of  detail of the qualitative differences that  have huge quantitative implications for  pricing but that require quite  an extraordinary extend  of understanding of the  specific specifics of the sectors. So to  be able to react to shocks in these  sectors, I think one would really need quite  a bit of capacity that is quite tailored to  these sectors. So there's no like kind of one solution. That's it all if you think about housing versus oil  refineries, you would obviously need a  very different kind of policy approach. Right? So this  then means that kind of these and I mean  there is a lot of capacity out there, but it needs  to be connected back to the question of macroeconomic and  monetary stability.


   そして、より一般化されたインフレの監視能力を得ることができます。もちろん、監視能力が十分でない場合は、介入して安定させることができます。そして、この論文から生まれた政策思想の大きな転換は、セクターやラボに行くと、多かれ少なかれ均質な集合体という言葉から離れ、金利を1%上げるとか1%下げるとか、ポイント5とかポイント7とか、そういう話をすることができるようになることだと思います。しかし、それはかなり1つの次元のようなものであり、我々は非常に明確な方法を定量的にパーセントポイントで測定することができます右の明確なものであり、我々は今について考えるならば、非常に簡単です。この2年間は、価格設定に大きな量的影響を与える質的な違いを、驚くほど詳細に解明してきましたが、そのためには、各セクターの特殊性を理解することが非常に重要です。ですから、これらのセクターのショックに対応するためには、これらのセクターに特化したキャパシティが必要だと思います。ですから、一つの解答のようなものはないのです。住宅と石油精製を比較した場合、明らかに異なる政策アプローチが必要になります。そうでしょう?つまり、このような、つまり、世の中にはたくさんの能力があるのですが、それをマクロ経済や金融の安定という問題に結びつけて考える必要があるのです。


Transcript: Isabella Weber On a New Way to Think About Inflation

Understanding inflation in a time of overlapping crises.

The decommissioned Greifswald nuclear power station in Lubmin, Germany, on Friday, Jan. 13, 2023. TotalEnergies SA and Swiss energy trader MET Group booked capacity at a new LNG terminal in Lubmin, helping boost supplies to Europe's biggest economy as it looks to replace Russian gas.
The decommissioned Greifswald nuclear power station in Lubmin, Germany, on Friday, Jan. 13, 2023. TotalEnergies SA and Swiss energy trader MET Group booked capacity at a new LNG terminal in Lubmin, helping boost supplies to Europe's biggest economy as it looks to replace Russian gas.Photographer: Krisztian Bocsi/Bloomberg
In economics, there tends to be two dominant ways of thinking about inflation. Either you agree with Milton Friedman, who described inflation as always and everywhere a monetary phenomenon (the result of too much money printing). Or you're more of a New Keynesian who thinks that higher prices are all about the relationship between demand and capacity. In a new paper inspired by Odd Lots and the series of disruptions that have rocked the economy since the global pandemic, UMass Amherst Economics Professor Isabella Weber describes a potential third way of thinking about inflation. She identifies systemically significant sources of inflation, or industries that could end up having a broader impact on a wide variety of prices. The hope is that by identifying these important sources of inflation early, policymakers can put in place measures to make sure price increases don't get out of hand. This transcript has been lightly edited for clarity.
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ーーー Music] [Applause] hello and welcome to another episode of the odd Lots podcast I'm Tracy Alloway and I'm Joe weisenthal Joe I I feel like I'm gonna Jinx things by saying this but it feels like inflation is maybe starting to come down a little bit at least it's not accelerating yeah let's put it that way well here's how uh here's what I've been thinking about which is that for the last year or the last year and a half we've done all of these episodes on like Supply chains and disruptions for this or that reason and all of the various times we've um used the term perfect storm to describe certain things in certain industries Perfect Storm of perfect storms my guess right now you know in January 2023 is that 2023's episodes will be a little less dominated by these topics that would be my guess I'm guessing that this year we do a few fewer Perfect Storm episodes I think that's right but I think you know we we spoke a lot about what it was that people didn't see coming when it comes to inflation why did a lot of economists get it wrong why was the inflation That was supposed to be transitory you know maybe it was transitory in the sense that it was narrow you know not a big sort of like macro Unleashed inflation but it definitely stuck around longer than a lot of people expected and so every time we have these big questions like why aren't we better at forecasting inflation it provides an opportunity to maybe learn something and start thinking about it in a slightly different way well yeah absolutely and I would say there's really two things that I feel are unanswered by all of the conversations that we've had uh in the last year so one is still like is inflation like a macro or a micro thing did it happen because a few categories uh really had some disruptions and then spill elsewhere and therefore it's not really about fiscal or monetary policy specifically and B okay we do have very high inflation right now even if there's evidence coming down what tool like if it is the case that a lot of it is related to disruptions and Chip shortages and freezes in Texas Etc what are the tools that are best to address that because it is important to get inflation down but on the other hand there's a pretty good argument that if the issue is some sort of disruption at the ports or whatever that sort of like strict blunt instruments like raising rates raising rates aren't necessarily the best uh approach to dealing with that kind of or raising rates won't grow more trees to turn into Lumber or more births at the ports or anything like that so I'm so glad you said that because today we are going to be speaking with one of our Odd Lots favorites and she has just written a new paper uh which she says is inspired by some of the conversations that we've had on odd Lots but it's also just really interesting because it presents a new sort of third wage potentially of thinking about inflation not transitory not persistent a new more interesting third option and that maybe could help us think about ways of accepting yes inflation is real it is a problem but that some of these blunt instruments that just treat inflation as a function of there's too much money in the economy we need there to be less maybe there are better approaches than just this sort of like blunt monetary approaches to addressing them absolutely so without further Ado we are going to be speaking today to Isabella Weber she is of course a economics professor over at the University of Massachusetts Amherst and you might remember her from from some previous episodes so Isabella thank you so much for coming back on odd lots thank you so much for having me it's a pleasure thank you so the paper is called inflation in times of overlapping emergencies systemically significant prices from an input output perspective but I just want to get you to say on camera that this is inspired by Autobots it is I mean a happy list and as you were just saying obviously you have been tracing all these price shocks that have been Rippling for the economy so um this paper is trying to come up with a framework to trace these shocks and ripple effects um in a somewhat more Aggregate and possibly less fine print but maybe a little bit more like formal kind of fashion I love that the most self-serving first question that we've ever asked on an interview what is you know what it what is an input output approach mean because my understanding is that this is actually like a very old idea in economics but that is some kind of it's actually been forgotten is my understanding and that this sort of like various versions of monitorist thinking which sort of treat if prices are high if one understand prices we'll just look at how much money or how much credit is in the economy rein that in and you've seen this paper seems to be like going back to like an older tradition in economics can you talk a little bit about what this is yeah so as you said we tend to think about inflation as a micro firm right where it's basically just aggregate measures whereas what we are trying to do here is to think of prices as um kind of an interconnected Network where um since one sector's output is another sector's input and therefore one sector's output prices are the cost of another sector you can kind of Trace um the price movements across the whole production Network which input output tables allow you to do so these tables basically like register the relationships of input and outputs um across the whole economy historically input output tables really had a breakthrough during the war time where the question was um how can we hit the enemies economy in ways that we kind of like with the minimum number of bombs um create the maximum damage to really I mean undermine um the enemy economy's ability to even fight a war I mean concretely of course this is mainly about the German economy um and so therefore it really is a method of identifying points um that are of particular systemic significance for the economy as a whole back then the idea was to identify these points of vulnerability to um I mean as I said create destruction the idea of our paper is to say if we can identify these points of vulnerabilities then we can actually um kind of um know what the potential sources of um of these rapid effects that can create marker outcomes um could be so if some prices matter more than others we want to know what these prices are and input output is one method of trying to identify these systemically significant sectors uh so Tracy my takeaway from that is that in a war it makes more sense to say bomb an oil refinery than a candy factory like it right like if you're thinking about well what are these sectors that will have the biggest Ripple effects across the economy then that would be the implication well maybe we should talk about morale in that context but no okay there's another there's another analogy um that you use in the paper which is you know if you're trying to identify systemically important sources of inflation and maybe address them before they start actually contributing to price increases it's kind of like trying to identify systemically important Banks and then making sure that they you know hold more regulatory capital or maybe go under preemptive stress tests or things like that can you talk about maybe you know before we get into policy Solutions can you talk about how that approach maybe differs to traditional ways of thinking about inflation because you know in my mind there's really there's the monetarist view it's all about the money supply and then there's a sort of new Keynesian view where it's more about you know supply side and capacity and demand and things like that can you place this new approach in the context of those two older ways of thinking about it so as different as like kind of monetarism and new canes business more keynesianism can be they share the understanding that inflation is always driven by macroeconomic factors right now what we are doing here I mean in one case it's um the the distance from from uh aggregate capacity utilization in the other case it's more that like classic story of too much money chasing to too few goods but still it's like trying to locate the the origins of inflation on the aggregate level what we are trying to do here is to say well if there are micro origins of inflation if shocks to specific sectors can matter in ways that they can unleash processes that actually unsettle the stability of prices overall then we want to understand stand what these sectors are we want to know where these points of vulnerability are so that we can react to these shocks before they kind of Ripple throughout the whole system and as you said interest rates are already being recognized as a systemically significant kind of price right that's why we have central banks which of course historically at some point was also not the case so it was a historical Evolution to recognize the systemic significance of interest rates so in some sense what we are arguing here is to um is to say that there are more prices than the price of boring money that can acquire systemic significance in ways that can have a very large implications for monetary stability just a shout out we are drawing here on the workouts of Salo or moreover who has been working on systemically significant prices for a while someone else we definitely have to have on the podcast at some point it's so funny because you know of course and we talked about this the last time you were on uh late last year you took a lot of heat for saying well maybe there's a time for having some discussion about price controls everyone freaked out about that and yet they're like okay now let's control the price of money as if that isn't a form of price control and yet of course Central Banking the ultimate price control the ultimate price control but you know so I joked but I guess it's not really a joke that like there are some areas where it's kind of obvious that some sort some functions in the economy are more crucial to other Industries than others so an oil refinery is going to be more crucial to other Industries than a candy factory but that's obvious how do you go about systematically identifying beyond the sort of really crude uh examples what is this this sort of like a rigorous or empirical approach to actually identifying what parts of the economy are in fact the most likely to have Ripple effects elsewhere so what we have done in this paper is that we have simulated shocks to every industry in the input output table and just orientation 71 industry so it's not super disaggregated I mean also not super aggregate compared to macroeconomic variables but it's still fairly broad right so we run a shock on each of these sectors and then we simulate how this shock runs through the whole economy reciting in in indirect impact on um on on the CPI right because if the price of oil goes up the price of plastic goes up the price of plastic toys goes up so therefore in the CPI you do not only have the direct effect of people con of people consuming fuel or gas but you also have indirect effects of plastic and plastic toys and then in all sorts of packaging and so on right so we are tracing this direct and indirect effect that resides from a price shock in any one individual sector and we run this um the simulation um for for every separate sector so that we then get distinct magnitudes that show us whether a shock to um to one sector matters more in comparison to another sector in other words we can create a ranking of what we call the total inflation impact from a shock in these sectors now um with the simulation we basically have three determinants that can render a sector systemically significant the first determinant is the bait in the CPI and housing is a great example here housing is not something that is very upstream and that creates a lot of property facts in in other Industries but it has a very large weight in the CPI right so therefore if there is a price change in housing it has a pretty large impact on on the CPI um something like um like oil and gas is actually pretty Upstream but not as Upstream as something like wholesale trade um because of the ways in which the upstreamness measures are constructed but for oil and gas you have very large price movements so the magnitude of the shocks that we use are either using average volatilities in the in the two decades before the pandemic or using the actual price change in the pandemic and in the context of the Ukraine war so in oil and gas we actually had very large price movements already before the pandemic and then again during the pandemic um and in in the context of the war so here the drivers would be kind of all three components the importance um in terms of indirect effects creating a relatively large total um weight in the CPI the large price movements and relatively Upstream even though not as Upstream as wholesale trade whereas for wholesale trade it's really um basically because of the upstreamness of that sector and then in the pandemic of course we also had Fairly large eyes movements there but before the pandemic the price movements and wholesale trade would have been much smaller than in in something like oil and gas extraction right so it's it's these three dimensions that we are capturing in in um in creating this ranking so just on this point can can I just press you when it comes to identifying the systemically important industries or I think you call them ubiquitous Industries like how do you just disaggregate their weight in the inflation indices versus the extent to which they matter for other prices because I'm sure there will be some people who who listen to this and say like well obviously energy and you know maybe some consumer goods and things like that have a higher weight in the CPI and so that's why you're getting these results if you look look at the paper which I'm not expecting anyone we can't we can't distinguish between a direct and an indirect effect right so what our direct inflation impact is is just the weight in the CPI right this is just giving you this is what the CPI shows us um uh is the weight of um of the change in safe petroleum and core products um for the change in the CPI um but then there's this additionist here which we call the indirect effect which comes um from tracing the indirect price um uh movements that reside from this initial shock in say petroleum and core products now of course we have to make assumptions on how Industries um hand over a cost increases right and we in the paper we make two distinct assumptions one is that it's just a pass-through of 100 and so firms just have a cost increase and just pass this on to their customers the second assumption that we make is to say what if firms actually don't just pass on the cost but they actually want to protect their profit margins now if their cost goes up go up and they were to increase prices by just the amount of the increasing costs their profit margin would go down right so what if um what if they actually protect their their profit margin so therefore increase prices by more than the increase in costs um so this then gives us different magnitudes of the total effect but we find that the rankings are relatively stable um independent of of these different um assumptions that we are making and the CPI that we are using here is a synthetic CPI because of course we have to break it down to um these 70 um One Industries that we have um so it's it's it's it's not the CPI that you download from the ba um if you just look for CPI but it's a CPI that you get from the ba if you look into input output tables you know something I'm interested in and I don't know if it's something you've specifically looked at but it sort of reminds me of this like you know we talk a lot about or economists have talked a lot in the last year about Goods versus Services inflation is if these are like two distinct categories of types of things that people buy that you can draw a bright line and say okay Goods have gone down but service is still up but it seems to me that any good that we buy is also implicitly a bundle of services that need to go into the you know if I buy a refrigerator well there's some sort of service person who helped delivery deliver the furniture um and there are services for you know the truck driver or whatever it is does your approach the sort of input output approach sort of um I I'm trying to think exactly the way to phrase that but in your view does it offer a more useful way of thinking about categories of goods Beyond just or sort of would seem to me like these arbitrary distinctions between between the types of things that get bought in the economy good question yeah great question um uh I mean I would of course say Yes um thank you thank you for saying that is a great question okay no no sorry keep going um to be sure services are part of the input output tables and we actually find that they are pretty Upstream because of the fact that you just described right because there is like some form of even like small administrative service um involved in pretty much everything so if we talk about it administer sorry if we talk about Upstream sectors we tend to think about the physical stuff like oil and gas or matches or chemicals and so on right but what we actually see when we do the analysis that is that some that that some services are very Upstream now the price movements in services are relatively small on average over time because they're very much um tied to wages right and wages tend to move much less than let's say commodity prices right so therefore when we run these shocks the service sectors even though um they are pretty Upstream end up not being very important for the general movement of of prices in in this model um because just the the initial shock um is so small if we model the shock um uh based on on magnitudes of past um price movements and price movements in the um in the in the in the covid-19 inflation now um I do think that this kind of does give us a different way of distinguishing um uh categories of of of of sectors if you want so because the idea here really is to say okay we don't care if it's services or if it's um Commodities or if it's processed Goods or if it's manufacturing or whatever it might be but all that we care about is um the importance of this sector it's if you want so it's centrality in relation to um all other sectors and in relation into people's consumption patterns right so what we find then is that the sectors that we identify systemically significant are basically in three groups so it's a basic necessities stuff like housing food Farms that of course produce a lot of food utilities and of course also energy and then basic production inputs stuff like um uh the the fossil fuels that we have already talked about but also chemical products and then kind of like basic circulation infrastructure so things like wholesale trade right which is critical for Commerce it's a kind of a basic commercial infrastructure so I do think that this does give us a different way of kind of um distinguishing um the nature of different sectors so once you've identified these systemically important industries um you know these ubiquitous Industries for inflation things like basic necessities housing Farms food and utilities and energy how does that inform the the policy response so the idea here is that because these sectors are so important that if there are a large price movements in these sectors that have this has implications Way Beyond these specific sectors um we should be paying more attention to what is happening in these sectors so the first implication is to say we need more monetary and capacity why do we need more monitoring capacity because we are living in some sort of a age of overlapping emergencies right where we have of course a pandemic that is not over um location for example at what's happening in China and how this impacts um Global production networks but also looking at climate change and your great episode on the Mississippi River and how this is a kind of just making a whole sector in this case of course grain um and other Commodities um grind to a hold but we also have these massive geopolitical tensions that can have some huge implications for the ways in which production is organized globally so in other words it seems very likely from my perspective that more shocks may be in the pipeline of course no one wants these shocks and everybody is hoping that things will be calm and stable um but um but uh like from the perspective of the Dynamics of overlapping emergencies even if inflation is now easing and it seems like in the next couple of years these kind of shocks um are likely to keep um coming so if that is the case you kind of want to have capacity on the side of the state to be able to monitor these sectors that are so important in um in in ways that allow you to react to these shocks um before they kind of create these um huge cascading effects throughout the whole economy and you then actually get some sort of potentially more generalized um kind of inflation um Beyond monitoring capacity of course not enough to watch you want to be able to kind of step in and stabilize right and um here then um I think the the big shift in in policy thinking that emerges from this paper is that once we go on the sector or a level we kind of leave the world of um more or less homogeneous Aggregates where we can talk about interest rates up by one percent or down by one percent or 0.5 or 0.75 or whatever but it's like pretty one dimensional right and pretty clear that there's like one dimension that we can measure very clear ways quantitatively in percentage points very straightforward if we now think about the prices of chemicals or um the stability of the flow of goods and wholesale trade and therefore um the the prices attached to Jose trade or the prices of Commodities we enter the world of qualitative differences right we enter the word of the the last um uh uh two years of odd Lots episodes right where you have been unpacking this um incredible amount of detail on the qualitative differences um that have huge quantitative implications for pricing but that require um quite um an extraordinary extent of um understanding of the specific specifics of these sectors so to be able to react to shocks in these sectors I think one would really need quite a bit of capacity that is quite tailored to these sectors so there's no like kind of um uh one solution that that's it all if you think about housing versus oil refineries you would obviously need a very different kind of policy approach right so this then means that kind of these and I mean there is a lot of capacity out there but it needs to be connected back to the question of macroeconomic and monetary stability it's always so funny to me that there exists a data point on the terminals that the FED monitor is called capacity utilization is if there's as if the concept of industrial capacity could ever be homogenized in a single index of like oh here's refining capacity here's apartment capacity here's capacity to make cars like it just like sort of blows my mind that that's like a that that could ever be boiled down to a single number let me ask you a random question is there a sector or a part of the economy that in your research surprised you as having uh more Ripple effects across other prices than you might have expected that maybe people I mean oil is obvious right we all know that everything needs energy G or whatever but other sectors that maybe people don't think of that have outsize effects generally speak resides are not terribly surprising which might make you say like yeah then why bother modeling it um to which I would answer well it is nice to kind of be able to capture these aggregate effects and Trace them in a systematic way throughout the economy one of the sectors that I think is quite interesting is chemical products like which is just in everything right it's like yes ubiquitous almost as um as as fossil fuels and is incredibly important and apparently is also important not only like from a quantity perspective of composition of production but also from uh from a price perspective so this is one that I personally hadn't hadn't thought about as much I think wholesale trade kind of came very much to um to the top of our minds in the pandemic but our simulations um for before the pandemic um also show that Jose trade was already pretty important which again is something that I think like from the pre-covet mindset would not have been something that I would necessarily have associated with thinking about um inflation wait sorry what's wholesale trade mean you said what what specific are you talking about yeah so Jose trait again like this is actually one of the points where probably the level of aggregation can become a problem I mean generally speaking it's stuff like Logistics but also wholesale Traders I mean any kind of company that um that provide that that basically does always say merchandising right um which yeah um yeah so Isabella can I ask one thing you mentioned in your paper you talk about the possibility of minimum inventory requirements so if you know that a specific industry or thing is important from an inflation perspective maybe we should build in additional inventory some resilience into the system and this is you know inventories the idea of business is moving to just in time and maybe being a little bit more vulnerable to Big shocks in demand this is almost classic odd Lots territory and it seems like the difficulty there is how do you encourage companies to build up that extra capacity in their system when maybe their incentives are more skewed towards you know just making money and profits and short-term things how do you actually go about doing that how realistic is it yeah absolutely great question um and I think that um I mean if it is about making money and some of the companies that have experienced uh bottlenecks actually have the experience that they have managed to increase their prices and raise that rented them even more profitable than before the pandemic right so then your incentive of um of increasing your inventory might actually be pretty low because you think like in normal times um I don't wanna have inventories because I want to be as efficient as I can be and then if sharks hit if everybody is kind of um running this same model like all competitors in one in one segment are running the same model so that they all don't have a lot of inventories then there's this exactly wide um supply chain shock which allows them to hide prices in ways in which they could not hike prices at normal times because now they kind of have this Mutual knowledge of um of uh of of shortage um so and then they end up being actually in a pretty good position and which we have seen in in some of the sectors that have experienced um extreme um uh uh impacts on on their supply chains during the pandemic right so therefore we somehow need a way to get out of this and I think because of what I just laid out it's not clear that companies by themselves would necessarily increase their inventories um that that sufficiently prevent this um Asian at least not to the extent as it would be like kind of um socially desirable or desirable from a more like um macroeconomic kind of standpoint how to do it practically again like I really see this paper as um providing a framework and kind of starting a conversation and I think to get to the question of how to do it practically and bond really has to start um talking to people who understand inventory management at companies rather than me like kind of as the armchair Economist coming up with some some sort of fix all the inventories of U.S corporations at once type of approach we're almost out of time I have one very short question but you know we did an episode recently and it was pointed out by one of our guests that the way a lot of economists think is that if the price of gas goes down for example that doesn't improve inflation because the sort of General equilibrium well that's more money in people's pockets and they're just going to spend more on haircuts now or they're just going to spend more on cars why there's a limit to how many haircuts yeah right or maybe they'll spend more on going out to eat okay so uh and then it doesn't really get us anywhere like what do you say I'm just curious your response to that that's like okay you target a sector great you target energy great then everything's cheaper people have more money and they spend elsewhere and you don't get anywhere why should that not why is that not a fatal flaw of your approach I mean this is the famous I mean one of the famous Friedman written Friedman quotes also where he's saying exactly what you just said we were back to like monitor the sort of core monitors thinking yeah yeah I mean this then kind of brings you back to the question of how firms are setting prices right um and if we are in a situation where we have very highly concentrated um uh corporate structures which I think is a fairly Fair descriptions of large parts of the American economy then we can actually see that um uh that the demand response sorry that the price response to demand is so surprisingly small in many cases that the prices are actually quite surprisingly stable I mean if you think back to the two decades some decades before covet where of course there have been periods of of more demand and less demand and so on but prices were surprisingly stable right and everybody was a kind of surprised like why are prices so stable well um because in a very concentrated sectors firms tend to um to compete over market share and compete over um conquering new segments of markets um compete over cutting costs and so on less than um than using any kind of small increase in demand by immediately raising prices right because if you raise prices in your competitor doesn't raise prices because both of you are price makers they're not price takers right then that can actually harm you so therefore um in in in the kind of institutional setting that we find ourselves in um I don't think it's clear that if people spend less on gas then immediately the prices of everything else that they are consuming are going up and I also don't think that this is something that we see empirically that the the price of gas and oil going down the inflation in other parts of the economy assembly like going up by any large margins Isabella we're going to have to leave it there but thank you so much for coming on odd Lots uh you're definitely one of our favorites and I'm not just saying that because you've translated the past two years into actual academic research um fascinating discussion thank you so much Isabella that was great thank you thanks Isabella foreign [Music] that conversation was great and the paper is definitely worth a read although I know Isabella said she didn't think anyone was actually going to read it one thing I was thinking is it does kind of go back to remember some of the conversations we had with Stephanie Kelton on Modern monetary Theory and you know her solution was well we need instead of reducing spending like maybe we identify where the bottlenecks are happening and we increase capacity or try to increase capacity and my criticism of that was it's difficult to do it in real time but I think studies like this maybe go some way towards identifying where to look right I think this use of input output tables and is uh Isabella said is actually a very old thing that you never hear mainstream economists talk about you know yeah it could be is like very useful idea and like okay it's like difficult sure it's a lot more difficult to like identify critical sectors than it is to just raise rates when CPI comes in higher than expected but it's doable and I did read the paper but when I say I read the paper what I mean is I read the first four pages skipped over the 40 pages of equations you have to do the intro and then the conclusion yeah so I read the I read the intro I skipped over like all the equations and Greek symbols or whatever and then the conclusion it and I thought it was really uh interesting and I think like I suspect and maybe as a result of all this the pandemic and everything there might be renewed interest in this sort of like pretty rigorous approach to identifying critical sectors and how they distribute prices across the economy exactly this I would be really disappointed if we came out of the past two or three years without a sort of like new way of thinking about inflation or at least maybe an additional Dimension yeah all right should we leave it there let's leave it there this has been another episode of the odd Lots podcast I'm Tracy Alloway you can follow me on Twitter at Tracy Alloway and I'm Joe weisenthal you can follow me on Twitter at the stalwart follow Our Guest Isabella Weber she's at Isabella and Weber and check out her paper inflation in times of overlapping emergencies systemically significant prices from an input output perspective follow our producers Carmen Rodriguez at Carmen Armin and dash Bennett at dashbot and check out all of our podcasts at Bloomberg under the handle at podcasts and for more Odd Lots content go to bloomberg.com Odd Lots where we post transcripts Tracy and I blog and we'll write a Weekly Newsletter every Friday go there subscribe to it get it in your inboxes thanks for listening [Music] thank you [Music] ー  

ーーー 音楽] [拍手] こんにちは、オッド ロット ポッドキャストの別のエピソードへようこそ 私はトレーシー アロウェイ、ジョー​​ ヴァイゼンタールです ジョー II これを言うことで物事をジンクスする気がしますが、おそらくインフレが始まっているように感じます少し下がってください 少なくとも加速していません ええ、そう言いましょう ええと、これが私が考えていたことです 昨年または昨年半の間、私たちはこれらすべてのエピソードをやったということですサプライ チェーンや混乱などの理由で、さまざまな時期にパーフェクト ストームという用語を使用して、特定の業界の特定のことを説明してきました。パーフェクト ストームのパーフェクト ストームは、2023 年 1 月が 2023 年のことだと思います。エピソードは、私の推測では、これらのトピックによって支配されることが少し少なくなります。今年はパーフェクト ストームのエピソードが数回少ないと思います。それは正しいと思いますが、インフレーションに関して人々が見ていなかったことが何であるかについて、多くのエコノミストが理解した理由について多くのことを話したことを知っていると思います。それはなぜインフレが一時的なものであると思われていたのか、それはおそらく狭いという意味で一時的なものだったのではないでしょうか。マクロのような大きなものではありません。なぜインフレの予測がうまくいかないのかなどの大きな疑問が生じるたびに、何かを学び、少し異なる方法でそれについて考え始める機会が得られます。私たちのすべての会話で答えられていない昨年はええとあったので、まだマクロまたはミクロのようなインフレが起こっているようなものです.いくつかのカテゴリで実際にいくつかの混乱があり、その後他の場所に波及したため、実際には財政政策や金融政策についてではなく、Bわかりました現在、非常に高いインフレがあります.たとえその多くがテキサス州の混乱やチップの不足や凍結に関連している場合、どのようなツールがどのようなものであるかという証拠があります.それに対処するのに最適なツールは何ですか.インフレを抑えることが重要だからですが、一方で、問題が港湾でのある種の混乱である場合、または率を上げるような厳格で鈍い手段のようなものである場合、率を上げることはできないというかなり良い議論があります。そのような、または率を上げるための最善のアプローチは必ずしも、より多くの木を成長させて材木に変えたり、港でより多くの出生をしたりすることはありません。私たちのオッドロットのお気に入りの1人と話していて、彼女はちょうど新しい論文を書きました.一時的なものではなく、持続的なものではなく、新しいより興味深い第3の選択肢であり、インフレが現実であることを受け入れる方法を考えるのに役立つ可能性があります。そこには'経済に必要なお金が多すぎるため、これらの問題に対処するためのこの種の鈍い金銭的アプローチよりも優れたアプローチがあるかもしれません.マサチューセッツ大学アマースト校の経済学教授で、以前のいくつかのエピソードで彼女を覚えているかもしれません。イザベラは奇数ロットに戻ってきてくれてありがとう。この論文は緊急事態が重なったときのインフレと呼ばれています 入出力の観点からシステム的に重要な価格ですが、これはオートボットに触発されたものであるとカメラの前で言ってもらいたいのですが、それはハッピーリストを意味します。明らかに、あなたは経済に波及しているこれらすべての価格ショックを追跡してきたと言っていたので、この論文は、これらのショックと波及効果を追跡するためのフレームワークを考え出そうとしています.フォーマルなファッションに少し似ているかもしれません.インタビューで聞いたことがありますが、インプット・アウトプット・アプローチとは何を意味するのか知っていますか?なぜなら、これは実際には経済学の非常に古いアイデアのようなものですが、それは実際には忘れられていることの一種であると私は理解しているからです。さまざまなバージョンの監視主義者のように、価格を理解している場合、価格が高い場合にどのような扱いをするかを考えています.経済にどれだけのお金や信用があるかを見て、それを抑制しているようです.経済学の古い伝統のように戻るように、これが何であるかについて少し話していただけますか?これは基本的に単なる総計ですが、ここで行おうとしているのは、価格を相互接続されたネットワークのようなものと考えることです。つまり、あるセクターの産出は別のセクターのインプットであり、したがって、あるセクターの産出価格は別のセクターのコストであるということです。生産ネットワーク全体での価格変動の追跡 入出力テーブルを使用すると、これらのテーブルを使用して、基本的に、経済全体での入力と出力の関係を登録することができます。問題は、最小数の爆弾で最大のダメージを与えるような方法で敵の経済をどのように攻撃できるかということでした。つまり、敵の経済を弱体化させるということです。もちろん、これは主にドイツ経済に関するものであり、したがって、経済全体にとって特に体系的に重要な点を特定する方法であり、当時のアイデアはこれらの脆弱な点を特定します 破壊を生み出すと言ったように、私たちの論文の考えは、これらの脆弱な点を特定できれば、実際にこれらの急速な影響の潜在的な原因が何であるかを知ることができるということです。マーカーの結果を作成することができます.ええと、ある価格が他の価格よりも重要である場合、これらの価格が何であるかを知りたい場合、これらのシステム的に重要なセクターを特定しようとする1つの方法であるインプットアウトプットがそうである可能性があります。キャンディー工場よりも製油所を爆撃したほうが理にかなっている経済全体に最大の波及効果をもたらすこれらのセクターが何であるかについてよく考えている場合、それはその文脈で士気について話す必要があるかもしれませんが、大丈夫です。別のアナロジーがあります。ええとシステム的に重要なインフレの原因を特定し、実際に物価上昇に寄与し始める前にそれらに対処しようとしている場合は、論文で使用していることを知っています。これは、システム上重要な銀行を特定し、それらの銀行がより多くの規制資本を保有していることを確認するようなものです。または、予防的ストレス テストなどを実施することを確認するようなものです。そのアプローチがインフレーションについての従来の考え方とどのように異なっているかというと、私の心の中では、マネーサプライがすべてであるというマネタリストの見解が本当にあることを知っているからです。もっと重要なことは、供給側と容量と需要を知っているということです。このような新しいアプローチを、それについての 2 つの古い考え方の文脈に置くことができますか?マネタリズムと新しい杖ビジネスのようなものと同じように、よりケインジアン主義である可能性があります。インフレは常にマクロ経済的要因によって引き起こされるという理解を共有する 現在ここで私たちが行っていることは、ある場合には総容量利用率からの距離であり、別の場合には、あまりにも多くのお金を追いかけるという古典的な話のようなものです商品が少なすぎますが、それでもあります」総体レベルでインフレの起源を突き止めようとするのと同じように、私たちがここでやろうとしているのは、インフレのミクロの起源があるかどうか、特定のセクターへのショックが、実際に社会を不安定にするプロセスを解き放つことができる方法で重要になるかどうかをうまく言うことです。全体的に価格が安定している場合、これらのセクターが何であるかを理解したい これらの脆弱性のポイントがどこにあるかを知りたいので、システム全体で波紋が発生する前にこれらのショックに対応できます。システム的に重要な種類の価格権として認識されている」なぜ私たちは中央銀行を持っているのか、もちろん歴史的にはそうではなかったので、金利の体系的な重要性を認識するのは歴史的な進化でした。通貨の安定性に非常に大きな影響を与える可能性のある方法で体系的な重要性を獲得できる退屈なお金の価格よりも多くの価格。ある時点で他の誰かが間違いなくポッドキャストに参加する必要がありますが、それはとても面白いです.価格管理について議論する時が来ました 誰もがそれについてびっくりしましたが、それでも彼らは大丈夫です 今はお金の価格を、それが価格管理の一種ではないかのように管理しましょう そしてもちろん中央銀行は究極の価格管理です究極の価格管理ですが、私は冗談を言いましたが、経済のある種の機能が他の産業よりも他の産業にとって重要であることが明らかな領域があるのは冗談ではないと思います。キャンディー工場よりも他の産業にとってより重要ですが、それは'明らかなのは、どのようにして体系的に特定するのか、非常に大雑把な例のようなものを超えて、この種のものは、経済のどの部分が実際に他の場所で波及効果を持つ可能性が最も高いかを実際に特定するための厳密または経験的アプローチのようなものです。この論文で行ったのは、産業連関表のすべての産業へのショックをシミュレートし、産業の方向性だけをシミュレートしたことです。したがって、それは過度に細分化されていません。つまり、マクロ経済変数と比較して超集約的ではありませんが、はまだかなり広い権利なので、これらのセクターのそれぞれにショックを与え、次にこのショックが経済全体にどのように影響するかをシミュレートします。プラスチックが上がるとプラスチック製のおもちゃの価格が上がるので、消費者物価指数では、人々が燃料やガスを消費するという直接的な影響があるだけでなく、プラスチックとプラスチック製のおもちゃ、そしてあらゆる種類のパッケージングの間接的な影響もありますというように、個々のセクターの価格ショックから生じるこの直接的および間接的な影響を追跡し、個々のセクターごとにシミュレーションを実行して、ショックが発生したかどうかを示す明確な大きさを取得します。つまり、あるセクターは別のセクターよりも重要であるということです。これらのセクターにおけるショックからの総インフレ影響と私たちが呼んでいるもののランキングです。シミュレーションでは基本的に、セクターをシステム的に重要なものにすることができる3つの決定要因があります。最初の決定要因はCPIの餌であり、住宅はここでの良い例です非常に上流にあり、他の産業で多くの不動産の事実を作成するものではありませんが、CPI 権利に非常に大きな重みを持っているため、住宅価格の変化があった場合、CPI um にかなり大きな影響を与えます。石油やガスのようなものは実際にはかなり上流ですが、卸売業のようなものほど上流ではありません。これは、上流性の測定が構築されている方法のためですが、石油とガスの場合、非常に大きな価格変動があるため、ショックの大きさは平均ボラティリティを使用していますパンデミックの前の20年間、またはパンデミックとウクライナ戦争の文脈での実際の価格変化を使用すると、石油とガスでは、実際にはパンデミックの前にすでに非常に大きな価格変動があり、その後パンデミックの間に再び変動しました。戦争の文脈では、ここではドライバーは3つの要素すべての一種であり、間接効果の観点から重要であり、消費者物価指数の総重量が比較的大きく、大きな価格変動と比較的上流であるが、卸売ほど上流ではない.卸売取引の場合はそれを取引します。ええと、基本的にはそのセクターの上流性が原因であり、もちろんパンデミックではそこにもかなり大きな目の動きがありましたが、パンデミックの前は、価格の動きと卸売取引は、石油やガスの採掘のようなものよりもはるかに小さかったでしょうそうですね、このランキングを作成するために私たちが捉えているのはこれらの 3 つの側面です。そのため、ここで、システム上重要な産業を特定することに関して、あなたに圧力をかけることができますか。インフレ指数の重みと、他の価格にとって重要な範囲とを分解するだけです。なぜなら、私は'これを聞いて、明らかにエネルギーのように言う人がいると確信しています。おそらく、一部の消費財やそのようなものはCPIでより高い重みを持っていることを知っているので、見ればこれらの結果が得られているのです。誰も期待していない論文では、直接効果と間接効果の権利を区別することはできません。したがって、直接的なインフレの影響は、CPIの権利の重みにすぎません。消費者物価指数は、ええと、ええと、安全な石油とコア製品の変化の重みが、ええと、CPI ええとの変化の重みであることを示しています。ここでは、この追加主義者を間接効果と呼んでいます。これは、石油やコア製品などのこの最初のショックに起因する間接価格の動きを追跡することから生じるものです。この論文では、2 つの明確な仮定を立てています。実際にはしないコストを転嫁するだけではありませんが、実際には、コストが上昇した場合に利益率を保護したいと考えており、コストが増加した分だけ価格を引き上げると、利益率が低下します。彼らは実際に利益率を保護しているので、コストの増加以上に価格を上げるので、全体的な効果の大きさは異なりますが、ランキングは、これらの異なる仮定とは無関係に比較的安定していることがわかります。ここで使用している CPI は合成 CPI です。もちろん、私たちが持っているこれらの 70 um の One Industries に分解する必要があるためです。 CPI を探すだけですが、sa ba から得られる CPI は、私が興味を持っていることを知っています。それがあなたが具体的に見たものかどうかはわかりませんが、私たちが昨年、財とサービスのインフレについてよく話しているか、エコノミストがよく話してきました。これらが、人々が購入するもののタイプの2つの異なるカテゴリのようなものである場合、明るい線を引いて大丈夫だと言うことができます 商品は下がったが、サービスはまだ稼働していますが、私たちが購入する商品は暗黙のうちにサービスのバンドルでもあり、そこで冷蔵庫をよく購入する場合に必要なサービスのバンドルでもあるようです。家具の配達を手伝ったある種のサービス担当者であり、トラックの運転手またはそれが何であれ、あなたのアプローチの一種のインプットアウトプットのアプローチを知っているためのサービスがあります。私はそれを表現する方法を正確に考えようとしていますが、あなたの見解では、商品のカテゴリーについて考えるより有用な方法を提供しています.経済について 良い質問です 素晴らしい質問です ええと もちろん そうです ええ ええ ええ 素晴らしい質問だと言ってくれてありがとうございます わかりました いいえ 申し訳ありませんあなたがちょうど正しく説明したという事実のために、彼らはかなり上流であることがわかります。なぜなら、ほとんどすべてに関与する小さな行政サービスのような形のようなものがあるからです。石油やガス、マッチなどの物理的なものについて考えたり、化学物質などは正しいですが、分析を行ったときに実際に見られるのは、一部のサービスは非常に上流であり、サービスの価格変動は、賃金に非常に結びついているため、時間の経過とともに平均して比較的小さいということです。そして賃金はレットよりもはるかに小さく動く傾向があります'コモディティ価格は正しいと言うので、これらのショックを実行すると、サービスセクターはかなりのものですが、このモデルでは、最初のショックが非常に小さいため、このモデルの価格の一般的な動きにとって上流はあまり重要ではありません。過去の価格変動の大きさと現在のcovid-19インフレの価格変動に基づいてショックをモデル化すると、この種の違いを区別する方法が得られると思いますここでのアイデアは本当に大丈夫だと言うことなので、それがサービスであろうと、商品であろうと、加工品であろうと、製造業であろうと、それが何であれ、私たちは気にしません。私たちが気にかけているのは、このセクターの重要性です。他のすべてのセクターと人々の消費パターンとの関係で中心性が正しいため、システム的に重要であると特定したセクターは基本的に3つのグループに分類され、住宅の食料などの基本的な必需品であることがわかります。多くの食品ユーティリティ、もちろんエネルギー、そして基本的な生産投入物、ええと、私たちがすでに話した化石燃料だけでなく、化学製品、そして基本的な流通インフラのようなものもあり、重要な卸売貿易権のようなものです商取引にとって、それは一種の基本的な商業インフラストラクチャであるため、これにより、さまざまなセクターの性質を区別する別の方法が得られると思います。これらのシステム上重要な産業を特定しました ええと、ご存知のように、これらのユビキタス産業はインフレのための基本的な必需品、住宅、農場、食料、公益事業、エネルギーなどです それはどのように政策対応に影響を与えるのでしょうかこれらのセクターでの大きな価格変動には意味があります これらの特定のセクターをはるかに超えて、これらのセクターで何が起こっているのかにもっと注意を払う必要があるため、最初の示唆は、より多くの通貨と能力が必要であるということです なぜより多くの監視能力が必要なのか私たちはある種の緊急事態が重なり合う時代に生きているので、もちろんパンデミックが発生していますが、その場所は例えばどこにあるのか中国で起こっていることと、これが世界の生産ネットワークにどのように影響するかだけでなく、気候変動とミシシッピ川でのあなたの素晴らしいエピソード、そしてこれがこの場合、もちろん穀物と他のコモディティとグラインドのセクター全体をどのように作るかについても見ていきます。しかし、私たちはこれらの巨大な地政学的緊張も抱えており、生産がグローバルに組織化される方法に大きな影響を与える可能性があります。つまり、私の観点からは、もちろん誰も望んでいないパイプラインにさらなるショックが発生する可能性が非常に高いと思われますこれらのショックと誰もが物事が穏やかで安定することを望んでいます.ええと、ええと、ええと、ええと、ええと、ええと、ええと、ええとええと、たとえインフレが現在緩和されていて、今後数年でこれらの種類のショックが発生するように思われるとしても、緊急事態が重なるというダイナミクスの観点からはそうです.ええと来続ける可能性が高いので、それが国家側に、非常に重要なこれらのセクターを監視できる能力を持たせたい場合、これらのショックに対応できるようにすることで、全体にこれらの巨大なカスケード効果が生じる前に対応することができます。経済全体と、その後、実際には、潜在的により一般化されたある種のインフレが発生します。もちろん、監視能力を超えて監視するのに十分ではありません。介入して安定させたいと思っています。この論文から明らかになった政策的思考の大きな変化は、セクターまたはレベルに進むと、金利が 1% 上昇または 1% 低下することについて話すことができる多かれ少なかれ均質な集合体の世界から離れるということです。パーセントか 0.5 か 0.75 か何でもそれ以外」かなり一次元的に正しいようで、そこにあることはかなり明確です」これは、非常に明確な方法でパーセンテージ ポイントで定量的に測定できる 1 つの次元のようなものです。化学物質の価格や、商品の流れと卸売り取引の安定性、したがってホセ貿易に付随する価格について考えると、非常に簡単です。コモディティの価格 私たちは質的な違いの世界に入ります 最後の言葉に入ります うーん うーん 2年間の奇数 たくさんのエピソード あなたが開梱してきたこのうーん質的な違いに関する信じられないほどの量の詳細 ええと、それは巨大な量的な意味を持っていますしかし、それには、これらのセクターの特定の詳細についての非常に広範な理解が必要なので、これらのセクターのショックに対応できるようにするには、これらのセクターに合わせて調整されたかなりの容量が本当に必要になると思いますそれで住宅と製油所について考えると、明らかに非常に異なる種類の政策アプローチが必要になるので、これはそのようなものを意味し、私は多くの容量があることを意味しますそこにあるが、それはマクロ経済と通貨の安定性の問題に結び付ける必要がある.FEDモニターが容量稼働率と呼ばれるターミナルにデータポイントが存在することは、私にとっていつもとても面白い.単一のインデックスで均質化することはできません。これは精製能力です。これはアパートの能力です。これは、このような車を作る能力です。単一の数字に煮詰めることができるようなものです.ランダムな質問をさせてください.あなたの調査で、他の価格であなたが持っているよりも多くの波及効果を持っていると驚いたセクターまたは経済の一部がありますか.おそらく人々は、私が意味する石油は明らかだと思います.すべてがエネルギーGまたは何でも必要であることを私たちは皆知っています.しかし、おそらく人々が考えていない他のセクターは、特大の効果を持っていると一般的に話されています.なぜそれをモデル化する必要があるのか​​、私はよく答えます。これらの総体的な効果を把握し、経済全体で体系的な方法でそれらを追跡できるのは素晴らしいことです。非常に興味深いと思うセクターの1つは、化学製品です。すべてが正しい」はい、化石燃料とほぼ同じくらい遍在しており、信じられないほど重要であり、生産の構成の量の観点からだけでなく、価格の観点からも重要であるように見えるので、これは私が個人的に持っていなかったものですあまり考えたことはありませんが、パンデミックの際に卸売業が頭に浮かんだと思いますが、パンデミック前のシミュレーションでは、ホセ貿易がすでにかなり重要であったことも示されています。切望される前の考え方から、私が必ずしもインフレについて考えることに関連付けられたものではなかったと思います。卸売業というのは、具体的に何について話しているのかと言ったという意味です。つまり、このようなホセの特性は、実際には、おそらく集約のレベルが問題になる可能性のあるポイントの1つです。ロジスティクスのようなものだけでなく、卸売トレーダーも意味します。つまり、基本的に常にマーチャンダイジングが正しいと言っているそれを提供するあらゆる種類の会社を意味します。はい、そうです。イザベラは、あなたがあなたの論文で言及したことの1つを尋ねてもいいですか。在庫要件なので、インフレの観点から特定の業界または物が重要であることがわかっている場合は、システムに追加の在庫を組み込む必要があるかもしれません。これは、ビジネスのアイデアがジャストインタイムに移行し、おそらく需要の大きなショックに対して少し脆弱です これはほとんど古典的な奇数ロットの領域であり、おそらく彼らのインセンティブがあなたが知っていることだけに偏っている場合に、企業がシステムにその余分な容量を構築するようにどのように奨励するかが難しいようですお金と利益と短期的なこと。実際にどのようにそれを行うのですか。それはどれほど現実的ですか。ええと、私はそれがお金を稼ぐことであり、ボトルネックを経験した企業のいくつかが実際に彼らがなんとか価格を上げて値上げしたという経験は、パンデミック前よりもさらに収益性を高めたので、在庫を増やすインセンティブは実際にはかなり低いかもしれません。私はできる限り効率的になりたいので、在庫を持ちたいのですが、サメがヒットした場合、1 つのセグメント内のすべての競合他社が同じモデルを実行しているように、誰もがこの同じモデルを実行している場合、彼らはすべて持っていません。そこにはたくさんの在庫があります」これはまさにサプライチェーン全体のショックであり、通常は価格を引き上げることができなかった方法で価格を隠すことができます。実際にはかなり良い位置にあり、パンデミック中にサプライチェーンに極端な影響を与えたいくつかのセクターで見られたので、何とかしてこれから抜け出す方法が必要だと思います。私がちょうどレイアウトしたもののために」企業自身が必然的に在庫を増やすかどうかは明らかではありません.少なくとも、社会的に望ましい、またはマクロ経済的な観点から望ましいほどではありません.このペーパーは、フレームワークを提供し、会話を開始するようなものであると実際に考えています。実際にそれを行う方法の問題に到達するには、企業の在庫管理を理解している人々と話し始める必要があります。安楽椅子のエコノミストのような私のようなものではなく、米国企業のすべての在庫を一度に修正するタイプのアプローチを考え出します。もうすぐ時間切れです。とても短い質問がありますが、最近あるエピソードでゲストの 1 人から指摘されました。人々のポケットにより多くのお金が入っている一種の一般均衡がうまくいっているため、インフレを改善しません。彼らは今、散髪にもっとお金を使うか、車にもっとお金を使うつもりです。なぜ散髪の数に制限があるのですか?または、彼らは外食にもっとお金を使うかもしれません。それで、あなたの言うように私たちを実際にはどこにも連れて行きません.それに対するあなたの反応が知りたいです.素晴らしい、すべてが安い人はより多くのお金を持っていて、彼らは他の場所で使いますが、あなたはそうしません.なぜそれがあなたのアプローチの致命的な欠陥ではないのですか?あなたが今言ったことを正確に言っているのですが、私たちはコアモニターのようなものを監視するのが好きだと言っています.非常に集中している企業構造は、アメリカ経済の大部分をかなり公平に説明していると思います。実際には、需要に対する価格反応が多くの場合驚くほど小さいことを、需要反応が残念に思っていることがわかります。価格は実際には非常に驚くほど安定しています。つまり、切望される数十年前の 20 年間を振り返ると、もちろん、需要が増加する時期と需要が減少する時期などがありましたが、価格は驚くほど安定しており、誰もが一種のなぜ価格が安定しているのか不思議非常に集中したセクターでは、企業は市場シェアをめぐって競争し、市場の新しいセグメントを征服するために競争する傾向があるため、コスト削減などをめぐって競争する傾向があるため、価格をすぐに引き上げて需要をわずかに増加させるよりも、そうではありません。あなたが競合他社で値上げをしても、価格が上げられないのは、どちらもプライスメーカーであり、彼らはプライステイカーではないからです。それは実際にあなたに害を及ぼす可能性があります。人々がガソリンの消費を減らせば、彼らが消費している他のすべての価格がすぐに上昇することは明らかだとは思わない.これは、ガスと石油の価格が大幅に上昇するのと同じように、経済アセンブリの他の部分のインフレが低下することを経験的に見ているものだと思います イザベラ 私たちはそれをそのままにしておく必要がありますが、ありがとうございます奇妙に来てくれてとてもたくさん ええと、あなたは間違いなく私たちのお気に入りの1人です.過去2年​​間を実際の学術研究に翻訳してくれたので、私はただ言っているのではありません。 Isabella Foreign [Music] に感謝します。その会話は素晴らしかったし、この論文は間違いなく読む価値がありますが、Isabella がそうは言っていないことは知っています。誰も実際にそれを読むつもりはなかったと思いますが、私が考えていたのは、ステファニー・ケルトンと現代金融理論について行った会話のいくつかを思い出すようなものであり、彼女の解決策は、ボトルネックがどこで発生しているかを特定し、キャパシティを増やすか、キャパシティを増やそうとしますが、それに対する私の批判は、リアルタイムでそれを行うのは難しいということでしたが、このような研究は、どこを正しく見るべきかを特定するのに何らかの方法で役立つと思います。産業連関表の使用とは、ええと、イザベラが言ったのは、実際には主流の経済学者が話しているのを聞いたことのない非常に古いことです。ええ、そうかもしれません。CPIが予想よりも高くなったときに金利を上げるよりも、重要なセクターを特定する方がはるかに困難ですが、それは実行可能であり、私は論文を読みましたが、私が論文を読んだと言うとき、私が意味するのは、最初の4ページを読み、40ページの方程式をスキップして、イントロと結論を書かなければならないということです。すべての方程式やギリシャ記号などのようにイントロをスキップし、それから結論を出して、それは本当に興味深いと思いました。おそらく、このすべての結果として、パンデミックとそこにあるすべてのものが新たな関心を引く可能性があると思います。重要なセクターを特定するためのこの種の非常に厳密なアプローチと、それらが経済全体にどのように価格を分配するかについて、これとまったく同じように、過去2、3年でインフレや少なくとも多分追加のディメンションはい、そこに残しておきましょう.私は Tracy Alloway です。Twitter で Tracy Alloway をフォローしてください。Joe Weisenthal です。Twitter で私をフォローしてください。 Isabella と Weber と一緒に、緊急事態が重なったときの彼女の紙のインフレをチェックしてください インプット アウトプットの観点からシステム的に重要な価格です Carmen Armin でプロデューサーの Carmen Rodriguez をフォローし、dashbot でダッシュ ベネットをフォローし、Bloomberg でポッドキャストのハンドルの下にあるすべてのポッドキャストをチェックしてください。オッド ロットのコンテンツの詳細については、bloomberg.com にアクセスしてください オッド ロットでは、トランスクリプトを投稿しています。 】 ーーーー毎週金曜日に週刊ニュースレターを書きます 購読して受信トレイに入れます 聞いてくれてありがとう [音楽] ありがとう [音楽] ーーーー

ーーー 0:00 [Music] [Applause] 0:09 hello and welcome to another episode of the odd Lots podcast I'm Tracy Alloway and I'm Joe weisenthal Joe I I feel like 0:17 I'm gonna Jinx things by saying this but it feels like inflation is maybe 0:23 starting to come down a little bit at least it's not accelerating yeah let's put it that way well here's how uh 0:29 here's what I've been thinking about which is that for the last year or the last year and a half we've done all of 0:35 these episodes on like Supply chains and disruptions for this or that reason and 0:41 all of the various times we've um used the term perfect storm to describe 0:46 certain things in certain industries Perfect Storm of perfect storms my guess right now you know in January 2023 is 0:53 that 2023's episodes will be a little less dominated by these topics that would be my guess I'm guessing that this 1:00 year we do a few fewer Perfect Storm episodes I think that's right but I think you know we we spoke a lot about 1:06 what it was that people didn't see coming when it comes to inflation why did a lot of economists get it wrong why 1:12 was the inflation That was supposed to be transitory you know maybe it was transitory in the sense that it was narrow you know not a big sort of like 1:19 macro Unleashed inflation but it definitely stuck around longer than a lot of people expected and so every time 1:27 we have these big questions like why aren't we better at forecasting inflation it provides an opportunity to 1:34 maybe learn something and start thinking about it in a slightly different way well yeah absolutely and I would say 1:40 there's really two things that I feel are unanswered by all of the conversations that we've had uh in the 1:47 last year so one is still like is inflation like a macro or a micro thing 1:52 did it happen because a few categories uh really had some disruptions and then 1:57 spill elsewhere and therefore it's not really about fiscal or monetary policy specifically and B okay we do have very 2:06 high inflation right now even if there's evidence coming down what tool like if 2:11 it is the case that a lot of it is related to disruptions and Chip shortages and freezes in Texas Etc what 2:19 are the tools that are best to address that because it is important to get inflation down but on the other hand 2:25 there's a pretty good argument that if the issue is some sort of disruption at the ports or whatever that sort of like 2:31 strict blunt instruments like raising rates raising rates aren't necessarily the best uh approach to dealing with 2:37 that kind of or raising rates won't grow more trees to turn into Lumber or more 2:42 births at the ports or anything like that so I'm so glad you said that because today we are going to be speaking with one of our Odd Lots 2:48 favorites and she has just written a new paper uh which she says is inspired by 2:53 some of the conversations that we've had on odd Lots but it's also just really interesting because it presents a new 2:59 sort of third wage potentially of thinking about inflation not transitory 3:05 not persistent a new more interesting third option and that maybe could help 3:10 us think about ways of accepting yes inflation is real it is a problem but 3:16 that some of these blunt instruments that just treat inflation as a function of there's too much money in the economy 3:22 we need there to be less maybe there are better approaches than just this sort of like blunt monetary approaches to 3:28 addressing them absolutely so without further Ado we are going to be speaking today to Isabella Weber she is of course 3:35 a economics professor over at the University of Massachusetts Amherst and you might remember her from from some 3:41 previous episodes so Isabella thank you so much for coming back on odd lots 3:46 thank you so much for having me it's a pleasure thank you so the paper is called inflation in times of overlapping 3:54 emergencies systemically significant prices from an input output perspective but I just want to get you to say on 4:01 camera that this is inspired by Autobots it is I mean a happy list 4:10 and as you were just saying obviously you have been tracing all these price shocks that have been Rippling for the 4:16 economy so um this paper is trying to come up with a framework to trace these shocks and 4:23 ripple effects um in a somewhat more Aggregate and possibly less fine print 4:28 but maybe a little bit more like formal kind of fashion I love that the most 4:35 self-serving first question that we've ever asked on an interview what is you 4:40 know what it what is an input output approach mean because my understanding is that this is actually like a very old 4:48 idea in economics but that is some kind of it's actually been forgotten is my 4:53 understanding and that this sort of like various versions of monitorist thinking which sort of treat if prices are high 5:00 if one understand prices we'll just look at how much money or how much credit is in the economy rein that in and you've 5:06 seen this paper seems to be like going back to like an older tradition in economics can you talk a little bit 5:11 about what this is yeah so as you said we tend to think about inflation as a micro firm right where it's basically just 5:19 aggregate measures whereas what we are trying to do here is to think of prices 5:24 as um kind of an interconnected Network where um since one sector's output is 5:31 another sector's input and therefore one sector's output prices are the cost of 5:37 another sector you can kind of Trace um the price movements across the whole 5:42 production Network which input output tables allow you to do so these tables 5:48 basically like register the relationships of input and outputs um across the whole economy historically 5:56 input output tables really had a breakthrough during the war time where 6:02 the question was um how can we hit the enemies economy in ways that we kind of like 6:10 with the minimum number of bombs um create the maximum damage to really I 6:17 mean undermine um the enemy economy's ability to even fight a war I mean concretely of course 6:23 this is mainly about the German economy um and so therefore it really is a 6:29 method of identifying points um that are of particular systemic significance for 6:36 the economy as a whole back then the idea was to identify these points of vulnerability to um I mean as I said 6:43 create destruction the idea of our paper is to say if we can 6:48 identify these points of vulnerabilities then we can actually um kind of um know what the potential 6:56 sources of um of these rapid effects that can create marker outcomes um could be so if 7:03 some prices matter more than others we want to know what these prices are and input output is one method of trying to 7:10 identify these systemically significant sectors uh so Tracy my takeaway from 7:15 that is that in a war it makes more sense to say bomb an oil refinery than a 7:21 candy factory like it right like if you're thinking about well what are these sectors that will have the biggest Ripple effects across the economy then 7:28 that would be the implication well maybe we should talk about morale in that context but no okay there's another 7:34 there's another analogy um that you use in the paper which is you know if you're trying to identify systemically 7:40 important sources of inflation and maybe address them before they start actually 7:47 contributing to price increases it's kind of like trying to identify systemically important Banks and then 7:54 making sure that they you know hold more regulatory capital or maybe go under preemptive stress tests or things like 8:01 that can you talk about maybe you know before we get into policy Solutions can you talk about how that approach maybe 8:08 differs to traditional ways of thinking about inflation because you know in my 8:14 mind there's really there's the monetarist view it's all about the money supply and then there's a sort of new Keynesian view where it's more about you 8:20 know supply side and capacity and demand and things like that can you place this new approach in the context of those two 8:27 older ways of thinking about it so as different as like kind of monetarism and 8:33 new canes business more keynesianism can be they share the understanding that 8:39 inflation is always driven by macroeconomic factors right now what we are doing here I mean in one case it's 8:46 um the the distance from from uh aggregate capacity utilization in the other case it's more that like classic 8:52 story of too much money chasing to too few goods but still it's like trying to locate the the origins of inflation on 8:59 the aggregate level what we are trying to do here is to say well if there are micro origins of inflation if shocks to 9:07 specific sectors can matter in ways that they can unleash processes that actually 9:13 unsettle the stability of prices overall then we want to understand stand what 9:20 these sectors are we want to know where these points of vulnerability are so 9:25 that we can react to these shocks before they kind of Ripple throughout the whole 9:31 system and as you said interest rates are already being recognized as a 9:37 systemically significant kind of price right that's why we have central banks which of course historically at some 9:44 point was also not the case so it was a historical Evolution to recognize the systemic significance of interest rates 9:50 so in some sense what we are arguing here is to um is to say that there are more prices than the price of boring 9:58 money that can acquire systemic significance in ways that can have a 10:03 very large implications for monetary stability just a shout out we are drawing here on the workouts of Salo or 10:09 moreover who has been working on systemically significant prices for a while someone else we definitely have to 10:14 have on the podcast at some point it's so funny because you know of course and 10:19 we talked about this the last time you were on uh late last year you took a lot of heat for saying well maybe there's a 10:26 time for having some discussion about price controls everyone freaked out about that and yet they're like okay now 10:32 let's control the price of money as if that isn't a form of price control and yet of course Central Banking the 10:39 ultimate price control the ultimate price control but you know so I joked but I guess it's not really a joke that 10:45 like there are some areas where it's kind of obvious that some sort some functions in the economy are more 10:51 crucial to other Industries than others so an oil refinery is going to be more crucial to other Industries than a candy 10:58 factory but that's obvious how do you go about systematically identifying beyond the 11:05 sort of really crude uh examples what is this this sort of like a rigorous or 11:10 empirical approach to actually identifying what parts of the economy are in fact the most likely to have 11:16 Ripple effects elsewhere so what we have done in this paper is that we have simulated shocks to every industry in 11:23 the input output table and just orientation 71 industry so it's not super disaggregated I mean also not 11:29 super aggregate compared to macroeconomic variables but it's still fairly broad right so we run a shock on 11:36 each of these sectors and then we simulate how this shock runs through the whole economy reciting in in indirect 11:44 impact on um on on the CPI right because if the price of oil goes up the price of 11:50 plastic goes up the price of plastic toys goes up so therefore in the CPI you do not only have the direct effect of 11:57 people con of people consuming fuel or gas but you also have indirect effects 12:02 of plastic and plastic toys and then in all sorts of packaging and so on right so we are tracing this direct and 12:09 indirect effect that resides from a price shock in any one individual sector 12:15 and we run this um the simulation um for for every separate sector so that 12:21 we then get distinct magnitudes that show us whether a shock to 12:26 um to one sector matters more in comparison to another sector in other words we can create a ranking of what we 12:33 call the total inflation impact from a shock in these sectors now um with the 12:39 simulation we basically have three determinants that can render a sector systemically significant the first 12:46 determinant is the bait in the CPI and housing is a great example here housing 12:53 is not something that is very upstream and that creates a lot of property facts in in other Industries but it has a very 12:59 large weight in the CPI right so therefore if there is a price change in housing it has a pretty large impact on 13:07 on the CPI um something like um like oil and gas is actually pretty 13:14 Upstream but not as Upstream as something like wholesale trade um because of the ways in which the 13:19 upstreamness measures are constructed but for oil and gas you have very large 13:24 price movements so the magnitude of the shocks that we use are either using average volatilities in the in the two 13:33 decades before the pandemic or using the actual price change in the pandemic and 13:38 in the context of the Ukraine war so in oil and gas we actually had very large price movements already before the 13:45 pandemic and then again during the pandemic um and in in the context of the war so here the drivers would be kind of 13:52 all three components the importance um in terms of indirect effects creating a 13:58 relatively large total um weight in the CPI the large price 14:03 movements and relatively Upstream even though not as Upstream as wholesale trade whereas for wholesale trade it's 14:10 really um basically because of the upstreamness of that sector and then in the pandemic 14:17 of course we also had Fairly large eyes movements there but before the pandemic the price movements and wholesale trade 14:23 would have been much smaller than in in something like oil and gas extraction right so it's it's these three 14:29 dimensions that we are capturing in in um in creating this ranking so just on 14:34 this point can can I just press you when it comes to identifying the systemically important industries or I think you call 14:41 them ubiquitous Industries like how do you just disaggregate their weight in 14:47 the inflation indices versus the extent to which they matter for other prices 14:53 because I'm sure there will be some people who who listen to this and say like well obviously energy and you know 15:00 maybe some consumer goods and things like that have a higher weight in the CPI and so that's why you're getting 15:06 these results if you look look at the paper which I'm not expecting anyone 15:11 we can't we can't distinguish between a direct and an indirect effect right so 15:18 what our direct inflation impact is is just the weight in the CPI right this is just giving you this is what the CPI 15:25 shows us um uh is the weight of um of the change in safe petroleum and core products um 15:32 for the change in the CPI um but then there's this additionist here which we call the indirect effect 15:40 which comes um from tracing the indirect price 15:45 um uh movements that reside from this initial shock in say petroleum and core products now of course we have to make 15:52 assumptions on how Industries um hand over 15:57 a cost increases right and we in the paper we make two distinct assumptions 16:02 one is that it's just a pass-through of 100 and so firms just have a cost 16:08 increase and just pass this on to their customers the second assumption that we make is to say what if firms actually 16:16 don't just pass on the cost but they actually want to protect their profit margins now if their cost goes up go up 16:23 and they were to increase prices by just the amount of the increasing costs their 16:28 profit margin would go down right so what if um what if they actually protect their their profit margin so therefore 16:34 increase prices by more than the increase in costs um so this then gives 16:41 us different magnitudes of the total effect but we find that the rankings are relatively stable um independent of of 16:48 these different um assumptions that we are making and the CPI that we are using here is a synthetic CPI because of 16:55 course we have to break it down to um these 70 um One Industries that we have 17:00 um so it's it's it's it's not the CPI that you download from the ba um if you 17:06 just look for CPI but it's a CPI that you get from the ba if you look into input output tables 17:11 you know something I'm interested in and I don't know if it's something you've specifically looked at but it sort of 17:18 reminds me of this like you know we talk a lot about or economists have talked a lot in the last year about Goods versus 17:23 Services inflation is if these are like two distinct categories of types of 17:29 things that people buy that you can draw a bright line and say okay Goods have gone down but service is still up but it 17:34 seems to me that any good that we buy is also implicitly a bundle of services that need to go into the you know if I 17:42 buy a refrigerator well there's some sort of service person who helped delivery deliver the furniture 17:48 um and there are services for you know the truck driver or whatever it is does 17:53 your approach the sort of input output approach sort of um 17:58 I I'm trying to think exactly the way to phrase that but in your view does it offer a more useful way of thinking 18:05 about categories of goods Beyond just or sort of would seem to me like these arbitrary distinctions between between 18:11 the types of things that get bought in the economy good question yeah great question 18:16 um uh I mean I would of course say Yes um thank you thank you for saying that 18:22 is a great question okay no no sorry keep going um to be sure services are part of the 18:28 input output tables and we actually find that they are pretty Upstream because of the fact that you just described right 18:34 because there is like some form of even like small administrative service um involved in pretty much everything so 18:41 if we talk about it administer sorry if we talk about Upstream sectors we tend to think about the physical stuff like 18:48 oil and gas or matches or chemicals and so on right but what we actually see 18:54 when we do the analysis that is that some that that some services are very Upstream now the price movements in 19:01 services are relatively small on average over time because they're very much 19:07 um tied to wages right and wages tend to move much less than let's say commodity 19:13 prices right so therefore when we run these shocks the service sectors even 19:18 though um they are pretty Upstream end up not being very important for the general 19:24 movement of of prices in in this model um because just the the initial shock um 19:32 is so small if we model the shock um uh based on on magnitudes of past um price 19:38 movements and price movements in the um in the in the in the covid-19 inflation 19:43 now um I do think that this kind of does give us a different way of distinguishing 19:50 um uh categories of of of of sectors if you want so because the idea here really 19:55 is to say okay we don't care if it's services or if it's um Commodities or if 20:01 it's processed Goods or if it's manufacturing or whatever it might be but all that we care about is um the 20:07 importance of this sector it's if you want so it's centrality in relation to um all other sectors and in relation 20:14 into people's consumption patterns right so what we 20:21 find then is that the sectors that we identify systemically significant are 20:26 basically in three groups so it's a basic necessities stuff like housing food Farms that of course produce a lot 20:33 of food utilities and of course also energy and then basic production inputs 20:39 stuff like um uh the the fossil fuels that we have already talked about but also chemical products and then kind of 20:46 like basic circulation infrastructure so things like wholesale trade right which 20:51 is critical for Commerce it's a kind of a basic commercial infrastructure so I do think that this 20:58 does give us a different way of kind of um distinguishing um the nature of different sectors so once you've 21:05 identified these systemically important industries um you know these ubiquitous Industries 21:11 for inflation things like basic necessities housing Farms food and utilities and energy 21:18 how does that inform the the policy response so the idea here is that 21:25 because these sectors are so important that if there are a large price 21:32 movements in these sectors that have this has implications Way Beyond these 21:37 specific sectors um we should be paying more attention to what is happening in these sectors so 21:43 the first implication is to say we need more monetary and capacity why do we 21:48 need more monitoring capacity because we are living in some sort of a age of overlapping emergencies right where we 21:56 have of course a pandemic that is not over um location for example at what's happening in China and how this impacts 22:03 um Global production networks but also looking at climate change and your great episode on the Mississippi River and how 22:10 this is a kind of just making a whole sector in this case of 22:16 course grain um and other Commodities um grind to a hold but we also have 22:21 these massive geopolitical tensions that can have some huge implications for the 22:26 ways in which production is organized globally so in other words it seems very likely from my perspective that more 22:33 shocks may be in the pipeline of course no one wants these shocks and everybody is hoping that things will be calm and 22:40 stable um but um but uh like from the perspective of the Dynamics of 22:46 overlapping emergencies even if inflation is now easing and it seems like in the next couple of years these 22:52 kind of shocks um are likely to keep um coming so if that is the case you kind 22:57 of want to have capacity on the side of the state to be able to monitor these 23:03 sectors that are so important in um in in ways that allow you to react to these 23:09 shocks um before they kind of create these um huge cascading effects   

23:15 throughout the whole economy and you then actually get some sort of potentially more generalized 23:21 um kind of inflation um Beyond monitoring capacity of course not enough to watch you want to be able 23:27 to kind of step in and stabilize right and um here then um I think the the big 23:34 shift in in policy thinking that emerges from this paper is that once we go on 23:40 the sector or a level we kind of leave the world of um more or less homogeneous Aggregates 23:47 where we can talk about interest rates up by one percent or down by one percent or 0.5 or 0.75 or whatever but it's like 23:54 pretty one dimensional right and pretty clear that there's like one dimension that we can measure very clear ways 24:01 quantitatively in percentage points very straightforward if we now think about 24:07 the prices of chemicals or um the stability of the flow of goods 24:12 and wholesale trade and therefore um the the prices attached to Jose trade or the prices of Commodities we enter 24:19 the world of qualitative differences right we enter the word of the the last 24:26 um uh uh two years of odd Lots episodes right where you have been unpacking this 24:32 um incredible amount of detail on the qualitative differences um that have 24:38 huge quantitative implications for pricing but that require 24:43 um quite um an extraordinary extent of um understanding of the specific 24:49 specifics of these sectors so to be able to react to shocks in these sectors I 24:56 think one would really need quite a bit of capacity that is quite tailored to 25:01 these sectors so there's no like kind of um uh one solution that that's it all if 25:08 you think about housing versus oil refineries you would obviously need a 25:13 very different kind of policy approach right so this then means that kind of these and I mean there is a lot of 25:19 capacity out there but it needs to be connected back to the question of 25:24 macroeconomic and monetary stability it's always so funny to me that there exists a data point on the terminals 25:31 that the FED monitor is called capacity utilization is if there's as if the 25:37 concept of industrial capacity could ever be homogenized in a single index of like oh here's refining capacity here's 25:43 apartment capacity here's capacity to make cars like it just like sort of blows my mind that that's like a that 25:49 that could ever be boiled down to a single number let me ask you a random question is there a sector or a part of 25:55 the economy that in your research surprised you as having uh more Ripple effects across other prices than you 26:02 might have expected that maybe people I mean oil is obvious right we all know that everything needs energy G or whatever but other sectors that maybe 26:09 people don't think of that have outsize effects generally speak resides are not terribly 26:15 surprising which might make you say like yeah then why bother modeling it 26:20 um to which I would answer well it is nice to kind of be able to capture these aggregate effects and Trace them in a 26:27 systematic way throughout the economy one of the sectors that I think is quite interesting is chemical products like 26:33 which is just in everything right it's like yes ubiquitous almost as um as as 26:40 fossil fuels and is incredibly important and apparently is also important not 26:47 only like from a quantity perspective of composition of production but also from uh from a price perspective so this is 26:55 one that I personally hadn't hadn't thought about as much I think wholesale trade kind of came very much to 27:02 um to the top of our minds in the pandemic but our simulations um for before the pandemic 27:09 um also show that Jose trade was already pretty important which again is 27:15 something that I think like from the pre-covet mindset would not have been something that I would necessarily have 27:21 associated with thinking about um inflation wait sorry what's wholesale 27:27 trade mean you said what what specific are you talking about yeah so Jose trait again like this is actually one of the 27:33 points where probably the level of aggregation can become a problem I mean generally speaking it's stuff like 27:39 Logistics but also wholesale Traders I mean any kind of company that um that 27:44 provide that that basically does always say merchandising right um which yeah 27:49 um yeah so Isabella can I ask one thing you mentioned in your paper you talk 27:55 about the possibility of minimum inventory requirements so if you know that a specific industry or thing is 28:02 important from an inflation perspective maybe we should build in additional inventory some resilience into the 28:08 system and this is you know inventories the idea of business is moving to just 28:13 in time and maybe being a little bit more vulnerable to Big shocks in demand this is almost classic odd Lots 28:20 territory and it seems like the difficulty there is how do you encourage companies to build up that extra 28:27 capacity in their system when maybe their incentives are more skewed towards you know just making money and profits 28:35 and short-term things how do you actually go about doing that how realistic is it yeah absolutely great 28:42 question um and I think that um I mean if it is about making money and some of the 28:48 companies that have experienced uh bottlenecks actually have the experience 28:53 that they have managed to increase their prices and raise that rented them even more profitable than before the pandemic 28:59 right so then your incentive of um of increasing your inventory might actually 29:05 be pretty low because you think like in normal times um I don't wanna have 29:10 inventories because I want to be as efficient as I can be and then if sharks hit if everybody is kind of um running 29:17 this same model like all competitors in one in one segment are running the same model so that they all don't have a lot 29:24 of inventories then there's this exactly wide um supply chain shock which allows 29:29 them to hide prices in ways in which they could not hike prices at normal times because now they kind of have this 29:35 Mutual knowledge of um of uh of of shortage um so and then they end up 29:41 being actually in a pretty good position and which we have seen in in some of the sectors that have experienced 29:48 um extreme um uh uh impacts on on their supply chains during the pandemic right so therefore we somehow need a way to 29:55 get out of this and I think because of what I just laid out it's not clear that 30:01 companies by themselves would necessarily increase their inventories 30:07 um that that sufficiently prevent this um Asian at least not to the extent as 30:12 it would be like kind of um socially desirable or desirable from a more like um macroeconomic kind of 30:18 standpoint how to do it practically again like I really see this paper as um 30:24 providing a framework and kind of starting a conversation and I think to get to the question of how to do it 30:30 practically and bond really has to start um talking to people who understand inventory management at companies rather 30:37 than me like kind of as the armchair Economist coming up with some some sort of fix all the inventories of U.S 30:44 corporations at once type of approach we're almost out of time I have one very short question but you know we did an 30:51 episode recently and it was pointed out by one of our guests that the way a lot of economists think is that if the price 30:56 of gas goes down for example that doesn't improve inflation because the sort of General equilibrium well that's 31:02 more money in people's pockets and they're just going to spend more on haircuts now or they're just going to 31:07 spend more on cars why there's a limit to how many haircuts yeah right or maybe 31:13 they'll spend more on going out to eat okay so uh and then it doesn't really get us anywhere like what do you say I'm 31:19 just curious your response to that that's like okay you target a sector great you target energy great then 31:24 everything's cheaper people have more money and they spend elsewhere and you don't get anywhere why should that not 31:30 why is that not a fatal flaw of your approach I mean this is the famous I mean one of the famous Friedman written 31:36 Friedman quotes also where he's saying exactly what you just said we were back to like monitor the sort of core 31:42 monitors thinking yeah yeah I mean this then kind of brings you back to the question of how firms are setting prices 31:48 right um and if we are in a situation where we have very highly concentrated 31:55 um uh corporate structures which I think is a fairly Fair descriptions of large parts of the American economy then we 32:02 can actually see that um uh that the demand response sorry that the price 32:07 response to demand is so surprisingly small in many cases that the prices are actually quite surprisingly stable I 32:14 mean if you think back to the two decades some decades before covet where 32:19 of course there have been periods of of more demand and less demand and so on but prices were surprisingly stable 32:26 right and everybody was a kind of surprised like why are prices so stable well um because in a very concentrated 32:33 sectors firms tend to um to compete over market share and compete over 32:40 um conquering new segments of markets um compete over cutting costs and so on less than um than using any kind of 32:49 small increase in demand by immediately raising prices right because if you raise prices in your competitor doesn't 32:55 raise prices because both of you are price makers they're not price takers right then that can actually harm you so 33:02 therefore um in in in the kind of institutional setting that we find ourselves in 33:08 um I don't think it's clear that if people spend less on gas then 33:14 immediately the prices of everything else that they are consuming are going up and I also don't think that this is 33:20 something that we see empirically that the the price of gas and oil going down the inflation in other parts of the 33:27 economy assembly like going up by any large margins Isabella we're going to have to leave it 33:33 there but thank you so much for coming on odd Lots uh you're definitely one of our favorites and I'm not just saying that because you've translated the past 33:40 two years into actual academic research um fascinating discussion thank you so much Isabella that was great thank you 33:46 thanks Isabella foreign 33:54 [Music] 33:59 that conversation was great and the paper is definitely worth a read although I know Isabella said she didn't 34:04 think anyone was actually going to read it one thing I was thinking is it does kind of go back to remember some of the 34:11 conversations we had with Stephanie Kelton on Modern monetary Theory and you know her solution was well we need 34:18 instead of reducing spending like maybe we identify where the bottlenecks are happening and we increase capacity or 34:25 try to increase capacity and my criticism of that was it's difficult to do it in real time but I think studies 34:32 like this maybe go some way towards identifying where to look right I think 34:38 this use of input output tables and is uh Isabella said is actually a very old 34:43 thing that you never hear mainstream economists talk about you know yeah it could be is like very useful idea and 34:50 like okay it's like difficult sure it's a lot more difficult to like identify critical sectors than it is to just 34:56 raise rates when CPI comes in higher than expected but it's doable and I did 35:01 read the paper but when I say I read the paper what I mean is I read the first four pages skipped over the 40 pages of 35:09 equations you have to do the intro and then the conclusion yeah so I read the I read the intro I skipped over like all 35:15 the equations and Greek symbols or whatever and then the conclusion it and I thought it was really uh interesting 35:21 and I think like I suspect and maybe as a result of all this the pandemic and 35:26 everything there might be renewed interest in this sort of like pretty rigorous approach to identifying 35:32 critical sectors and how they distribute prices across the economy exactly this I would be really disappointed if we came 35:38 out of the past two or three years without a sort of like new way of thinking about inflation or at least 35:44 maybe an additional Dimension yeah all right should we leave it there let's leave it there this has been another 35:50 episode of the odd Lots podcast I'm Tracy Alloway you can follow me on Twitter at Tracy Alloway and I'm Joe 35:56 weisenthal you can follow me on Twitter at the stalwart follow Our Guest Isabella Weber she's at Isabella and 36:02 Weber and check out her paper inflation in times of overlapping emergencies systemically significant prices from an 36:10 input output perspective follow our producers Carmen Rodriguez at Carmen Armin and dash Bennett at dashbot and 36:18 check out all of our podcasts at Bloomberg under the handle at podcasts and for more Odd Lots content go to 36:24 bloomberg.com Odd Lots where we post transcripts Tracy and I blog and we'll 36:30 write a Weekly Newsletter every Friday go there subscribe to it get it in your inboxes thanks for listening 36:36 [Music] 36:47 thank you [Music]

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