If a price level jump occurred as predicted by fiscal theory following a major fiscal shock, prices cannot actually jump instantaneously because they are sticky; instead, inflation rises gradually over time due to the lags and inertia in how inflation is measured and how prices adjust
causalpending
Speaker
Peter StellaEvidence Quote
“coming back to reality as opposed to the theory price the price level cannot jump you know it's just statistically not possible so we will see inflation come up”
Source
Debt Death Spirals, Fed's Losses, & Fiscal Theory Of Price Level | Peter Stella & Joseph Wang— Forward GuidanceCreated: 8/10/2026, 10:58:24 PM
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