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Discussion Paper
Money Aggregates, Debt, Pent-Up Demand, and Inflation: Evidence from WWII
Mandelman, Federico S. (2021-05-17)
The COVID-19 pandemic produced a massive decline in U.S. consumption in 2020 and swift fiscal and monetary responses. After growing at a rather steady 5 percent rate for decades, the moneysupply (M2) increased 25 percent over the past year alongside unprecedented fiscal support, raising some inflationary concerns. Concurrent with the reopening of the economy as vaccines roll out, this article derives some lessons from the U.S. experience during and after WWII. The debt-to-GDP ratio increased from 40 percent to 110 percent because of the war effort. Most of it was financed by Fed debt ...
Policy Hub* , Paper 2021-04

Discussion Paper
Money Aggregates, Debt, Pent-Up Demand, and Inflation: Evidence from WWII
Mandelman, Federico S. (2021-05-17)
The COVID-19 pandemic produced a massive decline in U.S. consumption in 2020 and swiftfiscal and monetary responses. After growing at a rather steady 5 percent rate for decades, the moneysupply (M2) increased 25 percent over the past year alongside unprecedented fiscal support, raisingsome inflationary concerns. Concurrent with the reopening of the economy as vaccines roll out, thisarticle derives some lessons from the U.S. experience during and after WWII. The debt-to-GDP ratioincreased from 40 percent to 110 percent because of the war effort. Most of it was financed by Fed debtpurchases, ...
Policy Hub* , Paper 2021-04

Journal Article
Geographic Inequality in Food Inflation
Kim, Seula; Navarrete, Michael (2026-02-02)
Using NielsenIQ Retail Scanner data, we study how food inflation varies across regions with different income levels and the role of retailer market structure. From 2006 to 2020, for the average consumer, food prices—as measured by the personal consumption expenditures (PCE) price index for food and beverages—rose by by about 1.8 percent per year. However, this aggregate increase masked substantial spatial heterogeneity. Poorer metropolitan statistical areas (MSAs) experienced annualized food inflation that was half a percentage point higher than that of richer ones—amounting to a ...
Policy Hub , Volume 2026 , Issue 1 , Pages 7

Journal Article
High and Volatile Inflation Begets a More Volatile Business Cycle
Blanco, Andrés (2026-07-13)
Following five years of inflation above the Federal Reserve's 2 percent target, a pressing question for policymakers is: what are the macroeconomic consequences of inflation remaining persistently elevated? Drawing on historical lessons from the 1970s and a new theoretical framework, this paper shows that elevated and persistent inflation makes the economy more vulnerable to costpush shocks. When inflation is already high, a cost-push shock generates larger and more persistent inflation and a deeper output contraction than it would in an environment of low and stable inflation. The ...
Policy Hub , Volume 2026 , Issue 5 , Pages 10

Journal Article
The Price of Delay: Supply Disruptions, Product Availability, and Strategic Pricing during the Pandemic
Fuchs, Simon; Baslandze, Salomé (2026-06-25)
During 2020–23, firms did not just face higher costs but faced an unusually tight constraint on product availability. Imports often did not arrive when expected, and port congestion and vessel delays made replenishment unusually uncertain. In Baslandze and Fuchs (2026), we study how these disruptions showed up in consumer prices using newly linked micro data that match shipment-level bills of lading to high-frequency consumer transaction prices. The evidence points to sizable pass-through from delivery shortfalls to prices, above and beyond the standard pass-through of costs. Prices also ...
Policy Hub , Volume 2026 , Issue 4 , Pages 16

Journal Article
Shipping Cost Shocks and US Producer Prices: Normal versus Crisis Pass-through
Gilchrist, Simon; Wei, Bin; Yue, Vivian Z.; Zakrajšek, Egon (2026-09-22)
This paper examines how fluctuations in shipping costs pass through to U.S. producer prices. We link confidential shipment-level import transactions from the Census Bureau's Longitudinal Firm Trade Transactions Database (LFTTD) to confidential firm-level producer prices from the Bureau of Labor Statistics' Producer Price Index (PPI) microdata, constructing a monthly panel of more than 6,000 U.S. manufacturing importers from 2005 to 2022. Using local projections and Bartik-style instruments based on route-level shipping-cost variation, we find that pass-through to domestic producer prices is ...
Policy Hub , Volume 2026 , Issue 7 , Pages 54

Journal Article
The Phillips Curve during the Pandemic: Bringing Regional Data to Bear
Higgins, Patrick C. (2021-09-09)
The Phillips curve appears to have held up well at the regional level during the COVID-19 era. Areas of the country that took relatively large hits to their unemployment rate and employment-population ratio during the pandemic have had lower inflation, on average, than areas that took relatively small hits. And, just as prior to the pandemic, the inverse relationship between inflation and unemployment continues to be statistically stronger for the prices of services than of goods.
Policy Hub , Volume 2021 , Issue 11

Journal Article
When Tight Is Too Tight: The Federal Reserve’s Response to the Post-World War II Spike in Inflation
Croteau, Nicholas; Mandelman, Federico S. (2023-11-09)
With the end of World War II, the massive expansion of defense spending came to a halt, and the money supply financing it quickly stabilized. However, the real money supply declined further with the transitory inflationary upswing of 1946–47, which fueled deflationary expectations, passively pushing up real interest rates and triggering the 1949 recession. We compare the Fed’s current stance to this historical episode, concluding that the ongoing tightening is already sufficient to normalize monetary conditions to prepandemic trends. This article also discusses how fiscal policy might ...
Policy Hub , Volume 2023 , Issue 8 , Pages 9

Journal Article
Money Aggregates, Debt, Pent-Up Demand, and Inflation: Evidence from WWII
Mandelman, Federico S. (2021-05-17)
The COVID-19 pandemic produced a massive decline in U.S. consumption in 2020 and swift fiscal and monetary policy responses. After growing at a rather steady 5 percent rate for decades, the money supply (M2) increased 25 percent over the past year alongside unprecedented fiscal support, raising some inflation concerns. Concurrent with the reopening of the economy as vaccines roll out, this article derives some lessons from the U.S. experience during and after WWII. The debt-to-GDP ratio increased from 40 percent to 110 percent because of the war effort. Most of it was financed by Fed debt ...
Policy Hub , Volume 2021 , Issue 4 , Pages 19

Report
Inflation Remains a Burden and Consumer Debt is on the Rise
Klesta, Matthew (2023-05-23)
The Federal Reserve Bank of Cleveland’s Community Issues Survey (CIS) collects information semiannually from direct service providers to monitor economic conditions and identify issues impacting low- and moderate-income (LMI) households in the Fourth District—a region that includes Ohio, western Pennsylvania, eastern Kentucky, and the northern panhandle of West Virginia. In March 2023, we surveyed more than 600 service providers who directly serve LMI individuals and communities across our District and received 95 responses (15 percent response rate). The results of this survey, ...
Community Development Publications

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