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The inflationary effects of sectoral reallocation()

The COVID-19 pandemic has led to an unprecedented shift of consumption from services to goods. We study this demand reallocation in a multi-sector model featuring sticky prices, input-output linkages, and labor reallocation costs. Reallocation costs hamper the increase in the supply of goods, causin...

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Detalles Bibliográficos
Autores principales: Ferrante, Francesco, Graves, Sebastian, Iacoviello, Matteo
Formato: Online Artículo Texto
Lenguaje:English
Publicado: Published by Elsevier B.V. 2023
Materias:
Acceso en línea:https://www.ncbi.nlm.nih.gov/pmc/articles/PMC10022469/
https://www.ncbi.nlm.nih.gov/pubmed/37363635
http://dx.doi.org/10.1016/j.jmoneco.2023.03.003
Descripción
Sumario:The COVID-19 pandemic has led to an unprecedented shift of consumption from services to goods. We study this demand reallocation in a multi-sector model featuring sticky prices, input-output linkages, and labor reallocation costs. Reallocation costs hamper the increase in the supply of goods, causing inflationary pressures. These pressures are amplified by the fact that goods prices are more flexible than services prices. We estimate the model allowing for demand reallocation, sectoral productivity, and aggregate labor supply shocks. The demand reallocation shock explains a large portion of the rise in U.S. inflation in the aftermath of the pandemic.