From Transitory to Embedded: Unpacking Inflation's Persistent Drivers

Introduction

In an era of economic volatility, distinguishing between temporary price fluctuations and persistent structural inflation is a critical skill for any professional in finance, economics, or public policy. While short-term inflation may be driven by fleeting events like supply chain disruptions or energy shocks, structural inflation is a deeper, more entrenched phenomenon fueled by fundamental shifts in the global economy. This course is designed to equip participants with the advanced analytical frameworks needed to identify these underlying drivers, from demographic changes and deglobalization to evolving labor market dynamics. By understanding the forces that embed inflation into the economic system, you will be better prepared to forecast long-term trends, develop robust policy responses, and make more resilient business and investment decisions.

Course Details

  • Duration: 10 days
  • Target Audience:
    • Central bank economists and policymakers
    • Financial market analysts and strategists
    • Macroeconomic researchers and academics
    • Government officials in finance and planning
    • C-suite executives and business leaders
    • Graduate students of economics and public policy

Learning Objectives

Upon completion of this course, you will be able to:

  1. Differentiate between transitory and persistent inflation.
  2. Identify the key structural drivers of long-term inflation.
  3. Analyze how demographics and aging populations affect price levels.
  4. Evaluate the inflationary impact of deglobalization and supply chain shifts.
  5. Understand the role of wage-price spirals in inflation persistence.
  6. Critique modern Phillips Curve models that account for persistence.
  7. Assess the impact of green transition and decarbonization on inflation.
  8. Interpret economic data to detect structural breaks in inflation trends.
  9. Develop policy recommendations to combat structurally embedded inflation.
  10. Forecast long-run inflation using advanced econometric and structural models.

Course Modules

Module 1: Defining Inflation Persistence

  • What is inflation persistence?
  • Measuring and estimating persistence
  • The difference between first- and second-order persistence
  • The role of inflation expectations
  • The Lucas Critique and policy relevance

Module 2: The Demographics of Inflation

  • Aging populations and labor force participation
  • Declining labor supply and its effect on wages
  • The demand patterns of older vs. younger populations
  • The impact on savings and capital formation
  • Case studies of Japan and European countries

Module 3: Deglobalization and Supply Chains

  • The historical disinflationary effect of globalization
  • The rise of protectionism and trade barriers
  • Reshoring, nearshoring, and supply chain restructuring
  • The impact on input costs and consumer prices
  • The post-pandemic supply chain shocks

Module 4: Labor Market Structures

  • Wage-setting mechanisms and wage indexation
  • The bargaining power of unions and workers
  • The "Great Resignation" and its effect on wages
  • The role of minimum wage laws and labor regulations
  • Analyzing the wage-price spiral and its sustainability

Module 5: The Green Transition and Inflation

  • The costs of decarbonization and renewable energy transition
  • Carbon taxes and their pass-through to prices
  • The impact on energy and raw material costs
  • Investment in green infrastructure and its inflationary impulse
  • Policy and technological solutions for a low-inflation transition

Module 6: Financialization and Asset Prices

  • How quantitative easing affects asset prices vs. consumer prices
  • The role of financial markets in propagating inflation
  • The wealth effect and consumption
  • The link between housing costs and inflation metrics
  • The debate on asset price inflation

Module 7: Public Debt and Fiscal Policy

  • The relationship between government debt and inflation
  • Fiscal dominance and the pressure on central banks
  • The inflationary impact of fiscal stimulus programs
  • Analyzing the sustainability of public finances
  • Historical examples of debt-driven inflation

Module 8: Inflation Expectations and Their Anchoring

  • How inflation expectations are formed
  • The importance of central bank communication and credibility
  • The risk of unanchored expectations
  • Surveys of consumers and businesses
  • The role of inflation-indexed bonds

Module 9: Econometric Analysis of Persistence

  • Time series analysis for inflation
  • Identifying structural breaks in data
  • Unit root tests and cointegration
  • The use of Vector Autoregressions (VARs)
  • Estimating inflation persistence with rolling regressions

Module 10: The New Keynesian Phillips Curve (NKPC)

  • The forward-looking and backward-looking components
  • Microfoundations of price stickiness
  • The role of marginal cost
  • Critiques and modern extensions of the NKPC
  • Using the NKPC to model persistence

Module 11: Case Studies of Persistent Inflation

  • The stagflation of the 1970s
  • The experience of different countries in the 21st century
  • The role of policy errors in embedding inflation
  • Cross-country comparisons and lessons learned
  • Analyzing the current global inflationary environment

Module 12: The Impact of Digitalization

  • The potential for "e-commerce deflation"
  • Price transparency and consumer behavior
  • The impact of automation and AI on productivity
  • The gig economy and its effect on wage data
  • How technology is altering the Phillips Curve

Module 13: Policy Responses to Structural Inflation

  • Monetary policy: aggressive vs. gradual tightening
  • The limits of monetary policy in addressing structural issues
  • Fiscal policy and supply-side reforms
  • The importance of credible and coordinated policy
  • The role of international cooperation

Module 14: Data Disaggregation and Analysis

  • The importance of looking beyond headline inflation
  • Analyzing core inflation, trimmed mean, and median measures
  • Dissecting sectoral contributions to inflation
  • Using microdata to understand price-setting behavior
  • Identifying "supercore" inflation

CERTIFICATION

  • Upon successful completion of this training, participants will be issued with Macskills Training and Development Institute Certificate

TRAINING VENUE

  • Training will be held at Macskills Training Centre. We also tailor make the training upon request at different locations across the world.

AIRPORT PICK UP AND ACCOMMODATION

  • Airport Pick Up is provided by the institute. Accommodation is arranged upon request

TERMS OF PAYMENT

Payment should be made to Macskills Development Institute bank account before the start of the training and receipts sent to info@macskillsdevelopment.com

For More Details call: +254-114-087-180

 

From Transitory To Embedded: Unpacking Inflation's Persistent Drivers in Dominica
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