I would also look at the effect of steel and aluminum tariffs on price increases, and limits on downward price declines due to reduced demand since there are constraints on foreign substitution. Also look at Canadian lumber tariffs. Adding the Trump tariffs and Chinese tariffs to the input/output tables might explain why prices go up, and decline more slowly despite a decrease in demand

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Yes: the Trump tariffs were a supply shock like the Ukraine War, but a much smaller one...

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Webber: Yes, this is what one supposes the Fed is trying to do in deciding how much flexibility above it's average inflation target, which is a just a modification of the calculation it made to decide that 2% PCE was the optimum average.

But that is the easy part. The hard part is to figure out month by month what settings to use for the FF rate, IOR, amounts of QE to buy or sell, etc.

Slightly surprising to read the reference to I-O. I suppose Webber means a fairly highly disaggregated CSGE model.

BTW, _I_ do not like the "natural" appellation. It's a estimate of an optimum and the parameters of estimation are themselves not "natural."

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