There are real, practical use cases for modern large neural network-based machine-learning models for:

1. regression and classification,
2. language interface to databases,
3. autocomplete on steroids, &
4. Highly verbal electronic-software pets.

But that does not mean that claims of grossly... 1/

Thanks Hannes!

Nonetheless I'd like to use this time to study how market power and tacit collusion interact with an inflationary environment.

THE END - thank you for your patience with my non-knowledge on how to make a thread on this platform

3. IO folk, myself included, helped push back against the seller's inflation story (aka greedflation). The narrative that market power is the cause of inflation simply does not pass the smell test. I'm glad we did. -->

What do you do when costs fall? Well, nothing. That is a wonderful focal point for a cartel to stick with. No reason to lower prices until somebody else does.

2. Price rigidity has many reasons and manifests itself in manners beyond Rockets & Feathers. -->

A few important clarifications and caveats: 1. Rockets & Feathers do not necessarily reflect a lack of competition. Could also result from information issues (e.g. Cabral & Fishman 2012). Nonetheless, tacit collusion remains an important explanation. -->

Instead, prices stabilize, which indeed brings down inflation. But under more competitive conditions, prices would fall back, at least partially, rather than just stabilize. Inflation would cool off faster, interest rates could be lower. -->

I'm talking about Rockets and Feathers. A refined statement would say: Big corporations jacked up prices when commodity prices were rising, we get that. But when the upstream cost pressures subside, prices do not go back down. -->

I used to show a picture of my own baby doing grocery shopping with me, presumably to indicate first-hand institutional knowledge of Jerusalem supermarkets. It worked out ok.

We tend to focus on the short-term trends, but it's worth taking a step back: Inflation has come down a *lot* from its peak. Headline now down to 3% y/y. Core at 3.5%. Those are still above the Fed's target and prepandemic levels, but it's a radically different story than a year ago.

❤️

😂

Likewise and thanks so much for making this happen!