Angry about inflation? It's time you got to know rockets and feathers
redtape.substack.com
It's rockets and feathers. All over the economy. As economists and politicians keep wringing their hands about inflation, I sure wish they would read up on asymmetric price adjustment -- a phenomenon dubbed "rockets and feathers" in this 2009 paper. Prices rise faster than they fall. Inflation always "sticks" longer than economists expect because we don't have perfect markets with perfect information. Those who set prices -- increasingly, large corporations armed with ingenious, diabolical software -- are better at "bargaining" than those who pay them, particularly during shocks that lead to inflation.
Angry about inflation? It's time you got to know rockets and feathers
Angry about inflation? It's time you got to…
Angry about inflation? It's time you got to know rockets and feathers
It's rockets and feathers. All over the economy. As economists and politicians keep wringing their hands about inflation, I sure wish they would read up on asymmetric price adjustment -- a phenomenon dubbed "rockets and feathers" in this 2009 paper. Prices rise faster than they fall. Inflation always "sticks" longer than economists expect because we don't have perfect markets with perfect information. Those who set prices -- increasingly, large corporations armed with ingenious, diabolical software -- are better at "bargaining" than those who pay them, particularly during shocks that lead to inflation.