What type of inflation do you define the one we are experiencing now? Demand-pull vs Cost-push? Anticipated vs Unanticipated? Or combo of all?
we are experiencing a demand-push deflation, it’s also unanticipated.
Inflation has droped quite a bit from the decline in commodity prices. When the inflation was a concern it was more of a cost push inflation from the sharp rise up in the commodity prices. It was also unanticipated.
So we had cost-push inflation most of 2008 until recent sharp drop of oil and commodity. Yet with Fed’s expansionary policy, we’ll have demand-pull inflation? It seems that massive layoff just started… How do you apply Philips curve to explain current scenario? SRAS will shift upward and LRAS curve will shift rightward to be beyond the natural unemployment rate? I felt we are sort of having a picture of stagflation: high rate of both inflation & unemployment. Either way, inflation is in no sight to abate in near term.