On this episode, Martin Neil Baily of Brookings speaks with Guido Lorenzoni, economist and co-author of a paper on wage-price spirals. They discuss how rising wages and prices can affect each other and drive inflation. The study suggests that wages can increase faster than inflation, at least for a time, without spinning the economy out of control. The podcast explores the interplay between wages and prices, scenarios of inflation and wage growth, optimal policy in managing overheated economy, and the response to supply shocks and sectoral shifts.