On Bottom Up Inflation Analysis — Brian Romanchuk

I have been running into comments about “top down” versus “bottom up” inflation analysis over the years, mainly on Twitter. The usual context is a conventional economist arguing that “bottom up inflation analysis is defective” for some reason or another. I have not seen a long form analysis justifying this, rather this was drive by snark. I have seen this more often as people are taking victory laps for inflation forecasting.

Since I am not huge fan of the people making the comments, I cannot offer a strong version of their views. I will instead offer a guess at what they were driving at, and explain why I think inflation analysis should be “bottom up.” (I discuss this in Section 3.3 of Breakeven Inflation Analysis.)...

Bond Economics
On Bottom Up Inflation Analysis
Brian Romanchuk
http://www.bondeconomics.com/2022/07/on-bottom-up-inflation-analysis.html