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> that long-term inflation expectations are not just interesting but are a decisive determinant of real-time inflation I think economists neglect to include an
by canada_dry 5y ago
> that long-term inflation expectations are not just interesting but are a decisive determinant of real-time inflation
I think economists neglect to include an obvious factor: people are greedy opportunists. When inflation first get reported on (in some tangentially related sector) the most opportunistic and greedy businesses jump at the opportunity to bump prices.
When less opportunistic (but still greedy) businesses see one of their suppliers bumping prices, they follow suit and it quickly gains momentum.
- solveit 5y ago> I think economists neglect to include an obvious factor In general, if you ever find yourself thinking that an entire discipline is neglecting an obvious factor, you should check whether that's actually true. I am pretty sure that your phenomenon of opportunistic price-hikes at reports of irrelevant inflation is either 1. Well-understood to not happen. or 2. Somebody's PhD thesis.
- canada_dry 5y ago> find yourself thinking that an entire discipline is neglecting an obvious factor Fair. Perhaps I'd rephrase it to "economists might be able to better understand the inflation phenomenon by recognizing that people are - by nature - greedy opportunists".