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A Latticework of Inflation Models

  • Thomas Mayer EMAIL logo
Published/Copyright: June 10, 2024

Abstract

Economists have repeatedly developed various theories for the origin of inflation and claimed that these theories were always valid everywhere. But history has shown that the theories – although they are useful – were only valid during certain time periods and under special circumstances. What is therefore needed is a system that assigns the various explanations of inflation to the specific circumstances for which they are particularly suited. This paper sets out such a system. Borrowing from Charlie Munger's (2005. Poor Charlie’s Almanack. Stripe Press), I call it a “latticework of inflation models”. In the first section 1 map the various inflation theories and then discuss and relate them to each other in the following sections. I find that during and after the pandemic several drivers of inflation were at work, so that several theories of inflation instead of just one allow a more comprehensive explanation of the inflation experienced during this period. The “latticework of inflation models” is also better suited than just one model for investigating the outlook for inflation.

JEL Classification: E31; E51; E52; E58

Corresponding author: Thomas Mayer, Flossbach von Storch Research Institute, Ottoplatz 1, 50679 Köln, Germany, E-mail:

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Received: 2024-05-09
Accepted: 2024-05-10
Published Online: 2024-06-10

© 2024 Walter de Gruyter GmbH, Berlin/Boston

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