Is inflation caused by conflict?

Nicolas Cachanosky and Emilio Ocampo ()

No 852, CEMA Working Papers: Serie Documentos de Trabajo. from Universidad del CEMA

Abstract: We offer a critique of a paper recently published Lorenzoni and Werning (2023) that seeks to make an original contribution to the hypothesis that inflation is primarily caused by conflict and reconcile the Post-Keynesian and New-Keynesian traditions. L&W’s paper has two sections. In the first they develop a barter model that allows them to prove that inflation can occur with conflict and without money. In the second they incorporate the conflict hypothesis into a broader framework compatible with New Keynesian models. We question the logical consistency and empirical validity of the barter model and the testability of the model with staggered pricing assumptions. We also trace the ideological roots of inflation as conflict hypothesis and highlight the policy implications that must be logically derived from it.

Keywords: conflict; inflation (search for similar items in EconPapers)
JEL-codes: E31 (search for similar items in EconPapers)
Pages: 18 pages
Date: 2023-04
New Economics Papers: this item is included in nep-hme, nep-mon and nep-pke
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Persistent link: https://EconPapers.repec.org/RePEc:cem:doctra:852

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