On my way back from giving this talk. One thing I enjoyed adding last moment are quotes from the original Phelps 1958 + Samuelson-Solow 1960.

A few tweets below to showcase these quotes and explain why I found them revealing...

Link to slides: dropbox.com/scl/fi/e12trr1…

1/n x.com/IvanWerning/st… First up, original Phillips 1958 (crazy career and life, New Zealander, crocodile hunter, POW in WWII, engineer, turned sociologist, turned economist...)

Very first page he highlights wage growth is nonlinear and depends on more than one thing: NOT A CURVE damn it!...

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💵Crónica de una Dolarización Anunciada💵

¿Cuál es el efecto de anunciar una dolarización no inmediata? (con pocos dólares!)

Tema caliente, pero mejor estudiarlo con la cabeza fría.
Te guste la dolarización o no... o ¿no?

Paper:

(pa'🇦🇷 o muy curiosos) https://t.co/xvUf0puec0dropbox.com/scl/fi/0wqfsx9…
Abro hilo...

Escena: Un país decide dolarizar, pero a falta de dólares en arcas del Estado, posterga el canje oficial pesos por dólares. Promete realizarlo en una fecha futura (fija por un periodo).

¡Cualquier parecido con la realidad es pura coincidencia! 🤣

Algo crucial...

What are the costs and benefits of giving up your own currency to adopt a foreign one? Of "Dollarizing"?💵

Ecuador, El Salvador, Zimbabwe did it in 2000s. Panama way back. Argentina tangoed with it and recent proposals have gained traction.

A thread on new 🇦🇷⭐️⭐️⭐️paper... Two well-known costs are...

1. the transfer of seignorage to foreigners (US with dollar)

2. losing monetary policy independence to stabilize shocks

A great discussion on why seignorage is not trivial is provided by Fischer in this old paper.

Short thread on markups and inflation---dismissive version... greedflation 🎩

Markup rising is not my go to explanation for inflation these days, but I don't think it is logically wrong.

Critics make good points, but some gaps and confusion I think prevails the discussion. First of all, in my view, increase in markups can logically fuel inflation. I don't just mean mechanically raise a few prices of those markup increases, but also leading to other prices and wages to rise, persistently.

Fauci interview “we should have listened to economists”

Painfully takes me back to early 2020…

My coauthors Acemoglu Chernozhukov Whinston and I put out a paper studying costs vs benefits and plus one overlooked essential economic idea: Targeting.

https://twitter.com/ivanwerning/status/1257268772529995778?s=61&t=gQ3-EPDKIhGNYTDUXcUD2w

https://twitter.com/reason/status/1652282101247406082

Arguments like these were well received by most economists, rationally considered and discussed. Many other economists made great contributions, especially as data became available.

Inflation, what is its most proximate cause? What is the right general framework to think about this messy phenomenon?

Very excited to put out this new paper exploring a generalized "conflict" perspective as the right answer.

Paper here: economics.mit.edu/sites/default/…

🧵a thread... (I release it today because I will present this today at 11 ET in a webinar, details down below)

This is very much a conceptual paper. Economists use certain lenses, frameworks or models to think about the world and policy. We need that!

Don't kid yourself: policy runs on theories (AKA "ideas for how things work").

Famous Keynes quote captures this and I can easily provide many recent examples. We need to interpret the data!

Let me offer a quick theoretical lens on the latest wage growth numbers. Early on in the pick up of inflation, prices outpaced wages on average, so real wages fell.

It is natural to expect wages to bounce back. A standard wage-price feedback. Scarier name for it is "Wage Price Spiral".

Nice thread by @R2Rsquared discussed the Gali-Gertler-Sbordone theory that a low labor wedge summons higher coming inflation, and how this may be at odds with the data.

Interestingly, our recent paper with @guido_lorenzoni does not make similar predictions. Indeed we show a...

https://twitter.com/R2Rsquared/status/1609880310816153600

... that a inflation may first rise, faster than wages, lowering the real wage (and labor share), followed by a fall in price inflation as wages rise and the real wage catch back up. So the opposite can happen. This depends on parameters and shock.

https://twitter.com/IvanWerning/status/1609273266702622721?s=20&t=PVOjk92-qyXrjrNaW0Holg

Olivier is making an important point that inflation comes from distributional conflict, but getting a lot of pushback. In my view misplaced.

This prompts me to share some research that explores this view of inflation with Guido Lorenzoni.

https://twitter.com/ojblanchard1/status/1608967176232525824

The analysis is done with a completely standard component of a macro New Keynesian (Calvo) model, and could be adapted to many other settings.

Inflation emerges from wage and price setters disagreeing on W/P aimed for and try to outdo each other, pushing up nominal prices/wages.

I wanted to make public 3 lectures in open economy macro that I had the pleasure to give at CREI Barcelona (100% based on joint work with Emmanuel Farhi).

Topics: Optimal Currency Areas, Fiscal Unions, Global Financial Cycle, Capital Controls, Mobility, Macropru policies.
1/n🧵 I hope to have a manuscript in a few months, for now I will put the slides up at the end of this thread.

Here is a quick summary of what you can find.

The goal is to think of some old and new questions with a new perspective. Deepening previous insights and providing new ones.

Modern IO ---> Macro!

Monopolistic competition reigns supreme in macro, trade, growth etc., but what about more realistic dynamic oligopolistic scenarios?

Olivier Wang (NYU Stern) will present our paper at NBER SI session. Link in next tweet. Short thread below. 1/n YouTube Stream, presentation at 12:45 ET:
youtube.com/watch?v=7p6jlI…

Here is the program
conference.nber.org/sched/SI20EFCE

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