The discussion about inflation is pretty muddled. There is a lot of confusion about aggregate demand versus individual demand, aggregate supply versus supply, and relative prices versus inflation. My ...

We present a theory of Keynesian supply shocks: supply shocks that trigger changes in aggregate demand larger than the shocks themselves. We argue that the economic shocks associated to the COVID-19 ...

A growing body of work has shown that aggregate shocks affect the formation of preferences and beliefs. This article reviews evidence from sociology, social psychology, and economics to assess the ...

This paper provides a decomposition of GDP and its deflator into demand and supply driven components for 12 Asian countries, the US and Europe, following the forecast error-based methodology of ...

Policy makers need to separate between temporary demand-driven shocks and permanent shocks in order to design optimal aggregate demand policies. In this paper we study the case of a central bank that ...

Explore how fiscal policy and monetary policy drive aggregate demand, influencing economic growth through spending, taxation, and money supply changes.

This post offers a framework for thinking about the effect of tariffs on major asset class returns by estimating asset classes’ response to supply shocks. This blog uses a Phillips curve approach to ...

With reference to a stylized theoretical macromodel, Blanchard and Quah (American Economic Review, 1989, 79, 655–673) identify empirical aggregate supply (e.g., productivity) and demand shocks by ...