Harmony in the Theory of Conflict Inflation: Various Conflict Inflation Models as Special Cases of the Generalised Conflict Inflation Model

Ryan Woodgate

No PKWP2622, Working Papers from Post Keynesian Economics Society (PKES)

Abstract: Disparate assumptions and interpretations across different models of conflict inflation have generated ambiguity and controversy. To address this issue, this paper demonstrates that a variety of prominent conflict inflation models can be derived from one unifying model, which is essentially a log-linear version of the Generalised Conflict Inflation Model (GCIM) seen in Woodgate (2026a, 2026b). Globally stable models (Dutt 1987, Blecker & Setterfield 2019, Lavoie 2022) emerge as special cases when inflation expectations are zero and aspiration-gap coefficients—shown to be frequencies of wage and price changes—are held constant. By reincorporating expectations and allowing frequencies of wage and price changes to rise endogenously with inflation, it is shown that the log-linear GCIM offers a simple but comprehensive post-Keynesian theory of hyperinflation. Unstable models (Hein & Stockhammer 2010, 2011) are then interpreted as special cases where the hyperconflict threshold is surpassed and adjustment frequencies reach their lower bound of one. By unifying these models, this paper helps resolve key controversies while offering a more analytically convenient model than the original GCIM.

Keywords: Inflation; distribution; stability; hyperinflation (search for similar items in EconPapers)
JEL-codes: D33 E12 E31 (search for similar items in EconPapers)
Pages: 20
Date: 2026-10
New Economics Papers: this item is included in nep-pke
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