Author(s): George Morrow
Inflation, the sustained increase in the general price level of goods and services over time, is a critical macroeconomic phenomenon that impacts various aspects of an economy. Despite its significance, the dynamics of inflation remain a complex and multifaceted puzzle in macroeconomics. This paper endeavors to unravel this puzzle by examining the underlying drivers, mechanisms, and consequences of inflation dynamics. Drawing on theoretical insights and empirical evidence, we explore the role of factors such as aggregate demand, supply-side shocks, monetary policy, and inflation expectations in shaping inflationary pressures. Furthermore, we investigate the transmission channels through which inflationary impulses propagate across different sectors and regions of the economy. By shedding light on the intricate interplay of these factors, this study aims to enhance our understanding of inflation dynamics and inform policymakers' decisions in managing inflationary risks and promoting price stability.