Inflation and distribution during the post-COVID recovery: a Kaleckian approach

Mark Setterfield

Journal of Post Keynesian Economics, 2023, vol. 46, issue 4, 587-611

Abstract: The early stages of recovery from the recession induced by the COVID-19 pandemic were accompanied by a marked increase in inflation in the US and elsewhere. Much has been made of this outcome, and the economic distress associated with it, in popular discussion of the economy. This paper provides a Kaleckian conflicting-claims analysis of inflation during the post-COVID recovery, that distinguishes between rising wages, pandemic-related supply shocks, and corporate price-setting behavior as sources of inflationary pressure. A key conclusion that arises from the co-determination of inflation and distributional outcomes in the Kaleckian framework is that distributional developments that have further disadvantaged working households, rather than inflation per se, are the chief source of recent economic distress – and should be the chief cause for concern among policy makers.

Date: 2023
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Working Paper: Inflation and distribution during the post-COVID recovery: a Kaleckian approach (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:mes:postke:v:46:y:2023:i:4:p:587-611

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DOI: 10.1080/01603477.2023.2249431

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