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.
References
Bańbura, Marta, Elena Bobeica, and Catalina Martínez Hernández. 2023. What Drives Core Inflation? the Role of Supply Shocks. ECB Working Paper No 2875. 10.2139/ssrn.4635969Suche in Google Scholar
Benati, Luca. 2009. Long Run Evidence on Money Growth and Inflation. ECB Working Paper Series No. 1027 (March).10.2139/ssrn.1345758Suche in Google Scholar
Borio, Claudio, Boris Hofmann, and Egon Zakrajšek. 2023. Does Money Growth Help Explain the Recent Inflation Surge? BIS Bulletin No. 67.Suche in Google Scholar
Brunner, Karl. 1961. “A Schema for the Supply Theory of Money.” International Economic Review 2 (1): 79–109. https://doi.org/10.2307/2525590.Suche in Google Scholar
Brunner, Karl, and Allan H. Meltzer. 1963. “The Place of Financial Intermediaries in the Transmission of Monetary Policy.” The American Economic Review 53 (2): 372–82.Suche in Google Scholar
Cantillon, Ricard. 1755. Essai sur la Nature du Commerce en Général. Paris.Suche in Google Scholar
Christoffel, Kai, Günter Coenen, and Anders Warne. 2010. Forecasting with DSGE Models. ECB Working Paper Series No. 1185 (May).10.2139/ssrn.1593643Suche in Google Scholar
Cochrane, John H. 2022. “Fiscal Histories.” The Journal of Economic Perspectives 36 (4): 125–46, https://doi.org/10.3386/w30328.Suche in Google Scholar
Cochrane, John H. 2023. The Fiscal Theory of the Price Level. Princeton: Princeton University Press.10.1353/book.109854Suche in Google Scholar
Fisher, Irving. 1911. The Purchasing Power of Money. New York: The Macmillan Co.Suche in Google Scholar
Friedman, Milton. 1963. Inflation, Causes and Consequences. New York: Asian Publishing House.Suche in Google Scholar
Friedman, Milton, and Anna Schwartz. 1963. A Monetary History of the United States, 1867–1960. Princeton: Princeton University Press.Suche in Google Scholar
Goetzmann, William. 2016. Money Changes Everything. Princeton: Princeton University Press.10.1515/9781400881307Suche in Google Scholar
Gold Avenue. 2020. The Great Denarius Debasement. (https://www.goldavenue.com/en/blog/newsletter-precious-metals-spotlight/the-great-denarius-debasement).Suche in Google Scholar
Gros, Daniel, and Farzaneh Shamsfakr. 2022. The ECB’s Normalisation Path. Brussels: Center for European Policy Studies (Brussels).Suche in Google Scholar
Hayek, Friedrich August von. 1952. The Counter-Revolution of Science: Studies on the Abuse of Reason. Glencoe, Illinois: The Free Press.Suche in Google Scholar
Hayek, Friedrich August von. 1974. Prize Lecture. https://www.nobelprize.org/prizes/economic-sciences/1974/hayek/lecture/.Suche in Google Scholar
Leeper, Eric M. 1991. “Equilibria under ‘Active’ and ‘Passive’ Monetary and Fiscal Policies.” Journal of Monetary Economics 27 (1): 129–47. https://doi.org/10.1016/0304-3932(91)90007-b.Suche in Google Scholar
Mayer, Thomas. 2018. Austrian Economics, Money and Finance. Milton Park and New York: Routledge.10.4324/9781315168296Suche in Google Scholar
Mayer, Thomas. 2022. Das Inflationsgespenst. Routledge: ECOWIN (Salzburg).Suche in Google Scholar
Mirowski, Philip. 1989. More Heat than Light: Economics as Social Physics, Physics as Nature’s Economics. New York: Cambridge University Press.10.1017/CBO9780511559990Suche in Google Scholar
Mises, Ludwig von. 1912. Theorie des Geldes und der Umlaufsmittel. Duncker: Duncker & Humblot (München und Leipzig).Suche in Google Scholar
Mishkin, Frederic S. 2000. From Monetary Targeting to Inflation Targeting: Lessons from the Industrialized Countries. Graduate School of Business, Columbia University and National Bureau of Economic Research.10.1596/1813-9450-2684Suche in Google Scholar
Mitchell, Rodger Malcolm. 2005. Free Money: Plan for Prosperity. PGM International.Suche in Google Scholar
Munger, Charles T. 2005. Poor Charlie’s Almanack. Stripe Press.Suche in Google Scholar
O’Brien, D. P. 2000. “Bodin’s Analysis of Inflation.” History of Political Economy 32 (2): 267–92.10.1215/00182702-32-2-267Suche in Google Scholar
OECD. 1979. “Monetary Targets and Inflation Control.” Monetary Studies Series.Suche in Google Scholar
Phillips, A.W. 1958. “The Relationship between Unemployment and the Rate of Change of Money Wages in the United Kingdom 1861–1957.” Economica 25 (100): 283–99. https://doi.org/10.2307/2550759.Suche in Google Scholar
Reinbold, Brian, and Wen Yi. 2020. “Is the Phillips Curve Still Alive?” Federal Reserve Bank of St. Louis Review. 102 (2). https://doi.org/10.20955/r.102.121-44.Suche in Google Scholar
Reinhardt, Carmen, and M. Belen Sbrancia. 2011. The Liquidation of Government Debt. NBER Working. Paper 16893.10.3386/w16893Suche in Google Scholar
Samuelson, Paul A., and Robert M. Solow. 1960. “Analytical Aspects of Anti-Inflation Policy.” In American Economic Review, Papers and Proceedings, Vol. 50, 177–94.Suche in Google Scholar
Sargent, Thomas J., and Neill Wallace. 1981. “Some Unpleasant Monetarist Arithmetic.” Federal Reserve Bank of Minneapolis Quarterly Review 5 (No. 3). https://doi.org/10.21034/qr.531.Suche in Google Scholar
Taylor, J. 1955. “Copernicus on the Evils of Inflation and the Establishment of a Sound Currency.” Journal of the History of Ideas 6 (4): 540–7, https://doi.org/10.2307/2707509.Suche in Google Scholar
Tödter, Karl-Heinz. 2002. “Monetary Indicators and Policy Rules in the P-Star Model.” In Discussion Paper 18/02. Frankfurt: Deutsche Bundesbank.10.2139/ssrn.2785154Suche in Google Scholar
© 2024 Walter de Gruyter GmbH, Berlin/Boston
Artikel in diesem Heft
- Frontmatter
- Editorial
- Economic Policy Making Under Hardening Fiscal Constraints
- Policy Papers (No Special Focus)
- A Latticework of Inflation Models
- A Comparative Evaluation of Fiscal Stabilization Strategies during the Covid-19 Pandemic with Germany as a Reference Point
- The Relationship Between the German Current Account and Financial Account: Evidence from the Toda-Yamamoto Causality Approach
- The Tax Attractiveness of EU Locations for Corporate Investments: A Stocktaking of Past Developments and Recent Reforms
- Aid in Conflict: Determinants of International Aid Allocation to Ukraine During the 2022 Russian Invasion
- Policy Forum: Economic Policy in an Era of Hardening Fiscal Constraints
- Public Debt Ratios Will Increase For Some Time. We Must Make Sure That They Do Not Explode
- An EU Fund to Incentivise Public Investments with Positive Externalities
- The Case for Putting a Public Investment Clause into the German Debt Brake
- EU Debt Instruments and Fiscal Transparency: The Case of the EU Recovery Fund
- Explaining the Divergence in German and French Public Finances
- Fiscal Prospects for Italy
- The Swiss Debt Brake Is Democratic, Strict, Transparent, and Binding. A Model to Follow?
Artikel in diesem Heft
- Frontmatter
- Editorial
- Economic Policy Making Under Hardening Fiscal Constraints
- Policy Papers (No Special Focus)
- A Latticework of Inflation Models
- A Comparative Evaluation of Fiscal Stabilization Strategies during the Covid-19 Pandemic with Germany as a Reference Point
- The Relationship Between the German Current Account and Financial Account: Evidence from the Toda-Yamamoto Causality Approach
- The Tax Attractiveness of EU Locations for Corporate Investments: A Stocktaking of Past Developments and Recent Reforms
- Aid in Conflict: Determinants of International Aid Allocation to Ukraine During the 2022 Russian Invasion
- Policy Forum: Economic Policy in an Era of Hardening Fiscal Constraints
- Public Debt Ratios Will Increase For Some Time. We Must Make Sure That They Do Not Explode
- An EU Fund to Incentivise Public Investments with Positive Externalities
- The Case for Putting a Public Investment Clause into the German Debt Brake
- EU Debt Instruments and Fiscal Transparency: The Case of the EU Recovery Fund
- Explaining the Divergence in German and French Public Finances
- Fiscal Prospects for Italy
- The Swiss Debt Brake Is Democratic, Strict, Transparent, and Binding. A Model to Follow?