tag:blogger.com,1999:blog-1110014885778996459.post5718868956218517857..comments2024-03-28T04:16:11.729-07:00Comments on Idiosyncratic Whisk: September 2016 InflationKevin Erdmannhttp://www.blogger.com/profile/07431566729667544886noreply@blogger.comBlogger11125tag:blogger.com,1999:blog-1110014885778996459.post-15478881082223997552016-11-06T14:44:45.777-07:002016-11-06T14:44:45.777-07:00good post, Kevin
another mechanism by which bette...good post, Kevin<br /><br />another mechanism by which better housing supply policy might drive up non-housing inflation is the scarcity of construction labor. restaurant and landscaping staff might become pricierMortimer Randolphhttps://www.blogger.com/profile/03461337204738090189noreply@blogger.comtag:blogger.com,1999:blog-1110014885778996459.post-88335004114401428422016-10-26T22:47:10.366-07:002016-10-26T22:47:10.366-07:00Yes. I think the PCE data is a little harder to p...Yes. I think the PCE data is a little harder to put together. I need to set up a spreadsheet. Housing is a smaller portion of PCE, so it has a slightly smaller effect on PCEPI than on CPI.<br /><br />Here's a Fred graph:<br />https://fred.stlouisfed.org/graph/?g=7Ylt<br /><br />You can see that, when shelter inflation is high, it pulls core CPI up higher than core PCEPI. Core PCEPI is about 1.6% now. Without shelter it would be at or below the non-shelter core CPI, I think. So, it's basically giving the same signal as CPI. But, yeah, I should probably put the spreadsheet together to follow it with more detail.Kevin Erdmannhttps://www.blogger.com/profile/07431566729667544886noreply@blogger.comtag:blogger.com,1999:blog-1110014885778996459.post-54529924055855302822016-10-26T20:59:16.030-07:002016-10-26T20:59:16.030-07:00 In other words, annual inflation outside of shelt... In other words, annual inflation outside of shelter is unlikely to rise back up above 1.5% for quite a while. It is probably more likely that it will move below 1%.--Kevin<br /><br />Important, great post. <br /><br />Could you do this post but with the PCE? The Fed uses the PCE. Benjamin Colehttps://www.blogger.com/profile/14001038338873263877noreply@blogger.comtag:blogger.com,1999:blog-1110014885778996459.post-74464905139377002952016-10-26T13:57:20.183-07:002016-10-26T13:57:20.183-07:00Technically, NGDP targeting doesn't solve this...Technically, NGDP targeting doesn't solve this problem. Housing consumption is still included. It is diluted somewhat - maybe 10% of total spending. So, the dilution helps minimize the problem. And the focus on total spending instead of inflation also kind of minimizing the problem. But, it is still there.<br /><br />It would be possible to target a different measure of national production that didn't include imputations.Kevin Erdmannhttps://www.blogger.com/profile/07431566729667544886noreply@blogger.comtag:blogger.com,1999:blog-1110014885778996459.post-7406943009318911452016-10-26T13:52:48.712-07:002016-10-26T13:52:48.712-07:00There is a developed monetary system of low levels...There is a developed monetary system of low levels of inflation in the 2%-3% range that seems to work in the current economic context. I just want us to do that right. Obviously supply side reforms in housing are very important. I have a long series on housing that you can review in the archived posts at the right margin regarding these issues.Kevin Erdmannhttps://www.blogger.com/profile/07431566729667544886noreply@blogger.comtag:blogger.com,1999:blog-1110014885778996459.post-49772652790589187532016-10-26T13:29:00.874-07:002016-10-26T13:29:00.874-07:00I want new supply too. Why implement a "regre...I want new supply too. Why implement a "regressive tax" to make it happen? Why not do some combination of rent subsidies (perhaps a write-off) and the tearing down of zoning restrictions?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1110014885778996459.post-11077398410357263702016-10-26T13:13:29.232-07:002016-10-26T13:13:29.232-07:00If we switched to NGDP targeting, then imputed ren...If we switched to NGDP targeting, then imputed rent would not be considered, right? Just dollars spent on newly constructed homes? billnoreply@blogger.comtag:blogger.com,1999:blog-1110014885778996459.post-6010659620948467292016-10-26T11:17:29.485-07:002016-10-26T11:17:29.485-07:00You don't have to guess. You can look it up!
...You don't have to guess. You can look it up!<br />I want rent inflation to come down, which will only happen with new supply. It's complicated.Kevin Erdmannhttps://www.blogger.com/profile/07431566729667544886noreply@blogger.comtag:blogger.com,1999:blog-1110014885778996459.post-76020927133638681872016-10-26T10:09:08.108-07:002016-10-26T10:09:08.108-07:00I think "most" is a stretch. Isn't t...I think "most" is a stretch. Isn't the ownership rate like 60%. Plus we already have political backlash from wealth inequality around the world. Keep letting rent run hot and you keep widening the wealth gap. It's essentially a regressive tax...and today's political climate is not friendly to regressive taxes.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1110014885778996459.post-38902811803346202082016-10-26T07:39:45.193-07:002016-10-26T07:39:45.193-07:00Most rent is imputed to owner-occupiers. So, it r...Most rent is imputed to owner-occupiers. So, it requires no cash and has little effect on the rate of other cash transactions.Kevin Erdmannhttps://www.blogger.com/profile/07431566729667544886noreply@blogger.comtag:blogger.com,1999:blog-1110014885778996459.post-52903587088838240632016-10-26T07:17:16.861-07:002016-10-26T07:17:16.861-07:00I continue to be puzzled by this notion that you c...I continue to be puzzled by this notion that you can simply strip out one piece of "inflation." With 100% certainty, if my rent were lower i'd spend more on other things thus pushing up inflation in those areas. No way to know if that'd be more or less inflationary overall but they are most certainly interconnected.<br /><br />I'm pretty sure in any inflationary episode in the past you could have pulled out a few problems areas and pointed to "supply issues." That's exactly where inflation occurs...almost by definition.Anonymousnoreply@blogger.com