Abstract: Many policymakers and economists are surprised by the recent high and persistent inflation. This naturally raises questions about what caused it and why it was so unexpected. This paper argues that the quantity theory of money provides a useful framework for forecasting inflation. Anyone equipped with the rather crude forecasting model would have predicted the high and persistent inflation in 2021 and 2022. The failure to foresee such an occurrence was due to the lack of money in mo...| Mercatus Center
Ron Mau is a senior business economist at the Federal Reserve Bank of Dallas.| www.dallasfed.org
Tyler Atkinson is a senior business economist in the Research Department of the Federal Reserve Bank of Dallas.| www.dallasfed.org
Collection of articles and research on monetary policy| www.dallasfed.org
The Center for Financial Stability promotes a stronger and more stable financial system through practical policy-oriented research, dialog between experts and policy-makers, and public education.| centerforfinancialstability.org