Toward a Theory of Self-Perpetuating Inflation

Paul Beckerman

Chapter 10 in The Economics of High Inflation, 1992, pp 182-189 from Palgrave Macmillan

Abstract: Abstract Inflation is one possible manifestation of a macroeconomic inconsistency in which a society’s economic entities collectively exercise more claims on goods and services than the quantity available. Since goods and services are scarce relative to exercised claims, their prices are bid up. In a “non-inflationary” resolution of this inconsistency, the disequilibrium would be temporary: once prices rose, money values of claims and available goods and services would settle into equilibrium. In an inflationary process, however, the value of exercised claims grows as fast as, or faster than, the value of the goods and services. It follows, then, that to understand an inflationary process is to understand how economic entities—considered individually or as definable entities—maintain or increase their claims even after a presumably equilibrating price-level rise.1

Keywords: Interest Rate; Power Allocation; Real Wage; Real Interest Rate; High Inflation (search for similar items in EconPapers)
Date: 1992
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DOI: 10.1007/978-1-349-21713-7_10

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