The scars of supply shocks: Implications for monetary policy

• 成果类型: Article
• 署名作者: Fornaro, Luca; Wolf, Martin
• 署名单位: Pompeu Fabra University; Centre de Recerca en Economia Internacional (CREI); University of St Gallen
• 刊物名称: JOURNAL OF MONETARY ECONOMICS
• ISSN/ISSBN: 0304-3932
• DOI: 10.1016/j.jmoneco.2023.04.003
• 发表日期: 2023
• 页码: 18-36
• 关键词: Energy shocks; hysteresis; INVESTMENT; endogenous growth; inflation; Covid-19

摘要

We study the effects of supply disruptions - for instance due to energy price shocks or the emergence of a pandemic - in an economy with Keynesian unemployment and endogenous productivity growth. By temporarily disrupting investment, negative supply shocks generate permanent output losses - or scarring effects. By inducing a negative wealth effect, scarring effects depress aggregate demand, which may even fall below the exogenous fall in supply. However, that scarring effects depress aggregate demand does not necessarily translate into low rates of inflation. On the contrary, scarring effects may reinforce and prolong the inflationary impact of supply disruptions. A contractionary monetary policy response may end up deepening scarring effects and increasing inflation in the medium run. A successful disinflation may require a policy mix of monetary tightening and fiscal interventions aiming at supporting business investment and the economy's productive capacity. (c) 2023TheAuthors. PublishedbyElsevierB.V. This is an open access article under the CC BY license (http://creativecommons.org/licenses/by/4.0/)