It is hard to go online there days without seeing garments being rended on the right over “Bidenflation!!!” Given the recent good news regarding supply chain improvements, (empty shelves seem to have been an October thing), gas prices declining, a 52 year low in new unemployment claims, and a growth rate adjusted for inflation of over 6%, the GOP is hammering on the one thing they can use to frighten Americans. And like virtually every Republican argument out there, they are misrepresenting things.
This paper updates and extends Friedman’s (1972) evidence on the lag between monetary policy actions and the response of inflation. Our evidence is based on UK and US data for the period 1953–2001 on money growth rates, inflation, and interest rates, as well as annual data on money growth and inflation. We reaffirm Friedman’s result that it takes over a year before monetary policy actions have their peak effect on inflation. This result has persisted despite numerous changes in monetary policy arrangements in both countries. Similarly, advances in information processing and in financial market sophistication do not appear to have substantially shortened the lag. The empirical evaluation of dynamic general equilibrium models needs to be extended to include an assessment of these models’ ability to account for the monetary transmission lags found in the data.
The current inflation has a number of factors that are pushing it, including the chip supply issue which is limiting the availability of many products. The market does what the market does. When supply drops prices rise. Blaming this on Biden is ridiculous, but that never stopped the GOP before.
So anyway, I wanted to get this out there as some material that can be used to counter the incessant “Bidenflation” braying from the asses on the right.