Does the inflation globally or in the OECD result from a demand or a supply shock?

If the increase in inflation results from a positive demand shock, a move to more restrictive monetary and fiscal policies would be justified. But if it results from a supply shortfall, a way must be found to stimulate supply rather than opting to drive down demand as much as supply. For the world and the OECD, we then look at: The level of production; The structure of demand between goods and services and demand for commodities; Labour supply; Investment. One can then conclude that inflation: Does not result from a n overall imbalance in the goods and services market; there is no overall excess demand despite weak labour supply; Results mainly from a shift in the structure of demand from services to goods , which has create d supply shortfalls in the inputs needed to produce goods (commodities, transport, semiconductors, etc.). This makes the standard analysis more difficult to carry out. If the structure of demand gradually rebalances towards services, this will eliminate the imbalances behind the current inflation. A restrictive fiscal policy reduces demand overall, so it would not be appropriate. A restrictive monetary policy has pros and cons: It may penalise demand for goods more than demand for services and therefore skew the structure of demand in the right direction; But it may also curb the investments needed to stimulate supply (transport, commodities, renewable energies), which would be counterproductive.