Honestly, and with all due respect to the good macroeconomists that the country has, for a long time I have thought that the Macro is lost in translation, incapable of translating what is happening with the economy today and diagnosing the aftermath. Ten years ago now, the big question for many analysts was what had become of inflation and why it had disappeared. And they asked for "a little inflation, please!", from the allegory that a little good cholesterol is always needed: today we are up to our eyebrows, about to suffer a stroke, with inflation that does not stop.
The first explanations were that inflation was a temporary issue, associated with the cost of energy and supply chains. The price of energy would have elements of its own correction by lowering taxes and capping prices. And the transport networks sooner or later had to be normalized. But core inflation, apart from those factors (food and energy, which are more volatile), remains high, anchored at 6%.
Second-round effects were identified here as the usual suspects, and among them, of course, salary increases. But the agreements signal increases well below the 8.5% that represents total inflation, with a high loss of purchasing power of workers. The rise does not reach a third of the increases shown in prices. Therefore, it does not seem that the reaction of wages to inflation is the cause of the spiral that scares economists so much.
Well, there is no other choice than to think that some businessmen (those who can because they are less exposed to competition, are less exporters and are more protected by regulation in the internal market) are experiencing their particular August. The summer has already been good enough for them, raising prices due to the high internal and external demand. Now that the salary increases are being considered, an income pact is requested. What economic policy would be advisable?
A second puzzle issue of the macro is that of the interest rate. Until recently, the Taylor Rule for subduing inflation through real interest rate increases had been identified: that nominal rates would have to approximate the sum of real GDP growth and target inflation. Can you imagine how inadequate this sum is in the time we live in? Although many authors try to reinterpret the rule, either in dynamic terms of trend or longer periods, it does not seem that this leads to a good port. And we could continue with the diluted natural rate of unemployment, which has been the basis of many analyses.
The macro is always more complex than the micro economy: more agents, more interdependencies, more balances, and for that reason, but also, more transcendental than the micro. It would be nice if neo-Keynesians, Friedmanist neo-liberals or the more heterodox 'modern monetary theory' would shed light on this darkness.
