I don't know, but Milton Friedman did speak of "long and variable" lags in the effects of policy on inflation. Specifically, he observed lags as long as two years and more.
It would be political irony on a massive scale if the covid shutdown of 2020 caused the inflation of 2021-2023, and Biden took the hit for it in 2024.
From the CDC's Covid Timeline:
- December 12, 2019: A cluster of patients in China’s Hubei Province, in the city of Wuhan, begin to experience the symptoms of an atypical pneumonia-like illness that does not respond well to standard treatments.
- March 13, 2020: The Trump Administration declares a nationwide emergency...
- March 15, 2020: States begin to implement shutdowns in order to prevent the spread of COVID-19.
Links:
Milton Friedman (1961):
The central empirical finding in dispute is my conclusion that monetary actions affect economic conditions only after a lag that is both long and variable.
Axios (July 2023):
In Central Banking 101, there is frequent talk of "long and variable lags" — the idea that after making an interest rate move, there is a delay of uncertain length before it really affects the economy.
Investing.com (Jan 2023):
Raphael Bostic, President and Chief Executive Officer Federal Reserve Bank of Atlanta said,
A large body of research tells us it can take 18 months to two years or more for tighter monetary policy to materially affect inflation.
The Hill (March 2023):
Citing the findings from his joint work with Anna Schwartz, Friedman goes on to state: “For individual cycles, the recorded lead has varied between 6 and 29 months at peaks and between 4 and 22 months at troughs.”
2 comments:
I assume the problem is that Friedman's model does not account for cost-push inflation. Probably considers it theoretically impossible or something. Sort of like monopoly and oligopoly are theoretically impossible because something something prisoner's dilemma.
Oh, Friedman definitely dismisses the possibility of cost-push inflation (see page 20 of this PDF.
In the post I was connecting covid and the covid shutdown of 2020 with the inflation that arose in 2021, the inflation that got worse until mid-2022 and then began tapering off, until now (last report July 2023) it has returned to the range of normal variability. And I was pondering how that problem (which began on Trump's watch) could occupy the whole of Joe Biden's four-year term and be somehow attributed to Biden (and not to the Federal Reserve!) and how all the agonizingly bad Sunday-morning political-talk shows that my wife watches, all of them, manage to say that Biden's poll numbers are down mostly because of the inflation.
There is a little irony in Fed Chair Jerome Powell saying in March 2021 that inflation was coming, and that he thought it would be temporary, and that he would give the inflation time to dissipate on its own; there is a little irony also in that Powell gave "temporary" a one-year test, and the Fed only began raising interest rates in March of 2022, so the "lag" could only after that begin to delay any reduction of inflation; and there is a little irony in the year or so (mid-2022 to mid-2023) while INFLATION WAS COMING DOWN, during which time THE MEDIA ONLY COMPLAINED ABOUT INFLATION MORE AND MORE. There is, however, massive political irony in the result, where apparently everyone holds Biden responsible for "the bad economy" when apparently (based on the media reports) they mean to blame Biden for the inflation because, again, apparently, our economy has no problem but inflation -- all thanks to the media's fine work.
That's all I was sayin
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