Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/283952 
Year of Publication: 
2022
Series/Report no.: 
Working Paper No. 2022-22
Publisher: 
University of Massachusetts, Department of Economics, Amherst, MA
Abstract: 
In the overlapping global emergencies of the pandemic, climate change and geopolitical confrontations, supply shocks have become frequent and inflation has returned. This raises the question how sector-specific shocks are related to overall price stability. This paper simulates price shocks in an input-output model to identify sectors which present systemic vulnerabilities for monetary stability in the US. We call these prices systemically significant. We find that in our simulations the pre-pandemic average price volatilities and the price shocks in the COVID-19 and Ukraine war inflation yield an almost identical set of systemically significant prices. The sectors with systemically significant prices fall into three groups: energy, basic production inputs other than energy, basic necessities, and commercial and financial infrastructure. Specifically, they are "Petroleum and coal products", "Oil and gas extraction", "Utilities", "Chemical products", "Farms", "Food and beverage and tobacco products", "Housing", and "Wholesale trade". We argue that in times of overlapping emergencies, economic stabilization needs to go beyond monetary policy and requires institutions and policies that can target these systemically significant sectors.
Subjects: 
Inflation
Systematically significant prices
Input-output analysis
Cost-push price formation
JEL: 
C67
E31
E61
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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