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How the Fed Managed the Treasury Yield Curve in the 1940s (Liberty Street Economics, 7 min read) Two key Lessons in Yield management from 1940 include; the shape of the yield curve cannot be fixed independently of the volatility of interest rates and debt management policies and, large-scale open market operations may be required, from time to time.
What drives inflation in advanced and emerging market economies? (BIS, 14-page read) Inflation expectations, output gaps, exchange rates, and oil prices impact inflation of individual economies differently. However, after the GFC, expected future inflation has become an important driver of inflation for both the advanced and emerging market economies.
The Responses of Consumption and Prices in Japan to the COVID-19 Crisis and the Tohoku Earthquake (JSPS, 14-page read) A study compares the responses of consumption and prices to the COVID-19 shock and the Tohoku earthquake in March 2011. The YoY CPI rose by 0.6% vs 2.2 percentage points in the wake of the earthquake. Consumer expected higher inflation after the earthquake, and lower in response to COVID 19. This difference in inflation expectations implies that the economic deterioration due to COVID-19 could be viewed as driven mainly by adverse aggregate demand rather than aggregate supply.
The True CPI Just Jumped (Econ Lib, 2 min read) There exist a CPI Bias. CPI calculation does not account for: a variety of available goods (loss of product variety due to shortages) and quality of goods (disruption of the international supply chain means using a substitute). During this crisis, CPI bias means that we fail to appreciate how much we’ve lost hence its effect is inflationary but may not be captured.