You are welcome to the Department of Economics and Finance research seminar "What Drives the Recent Surge in Inflation? The Historical Decomposition Roller Coaster".
The seminar will take place on Wednesday, the 28th of February, from 16:00 to 17:00 in room SOC-413 and MS Teamsi platform (link).
Presenter: Fabio Canova - BI Norwegian Business School
Paper title: What Drives the Recent Surge in Inflation? The Historical Decomposition Roller Coaster
Drago Bergholt - Norges Bank
Fabio Canova - BI Norwegian Business School
Francesco Furlanetto - Norges Bank
Nicol`O Maffei-Faccioli - Norges Bank
Pål Ulvedal - Nord University Business School
What drives the current inflation surge? To answer, one must decompose observable inflation fluctuations into the contributions due to structural shocks. We document how whimsical an historical shock decomposition can be in standard vector autoregressive models. Neglecting the uncertainty surrounding the deterministic components implies an erratic behavior for shocks over history under general conditions. Our favorite approach to solve the problem, the single-unit-root prior, massively shrinks the uncertainty around the deterministic components. We show that demand shocks are unambiguously the main drivers of the inflation surge in the United States, the euro area and four small open economies.
The public research seminars of the Department of Economics and Finance (DEF) at Tallinn University of Technology usually take place on the second and fourth Wednesdays of the month in online format, unless announced otherwise. The seminar will last one hour, presentation will last approximately 45 minutes followed by 15 minutes of discussion. The seminars are held in English. Questions about the seminar can be sent to the seminar coordinator Natalia Levenko: email@example.com.