Standard Econ Model Bridges the “Unfortunate Events” and “Original Sin” Explanations for Inflation

Jai Kedia

Two weeks ago, some of the biggest names in academia and monetary policy gathered at Brookings to discuss what factors had contributed to the recent spike in inflation. To that end, Ben Bernanke and Olivier Blanchard designed a model and found that the primary causes for post‐​Covid inflation were supply shortages, food price shocks, and energy price shocks – the “series of unfortunate events” explanation. However, their paper raises a larger issue with academic approaches to addressing real‐​world economic questions.