Price and Prejudice: A Note on the Return of Inflation and Ideology

By MatÍas Vernengo, Esteban Ramon Perez Caldentey

PKES Working Paper 2302

February 2023

The current debate on the causes of inflation is dominated by a particular view of what caused the inflationary acceleration in the 1970s, the so-called Great Inflation. In this view inflation is always and everywhere a demand phenomenon and requires contractionary monetary policy to be kept under control. The alternative view put forward by many heterodox authors emphasize what might be termed the oligopolistic view of inflation. In this paper we trace the limitations of both views for the center and the periphery.

Keywords: Center-periphery, conflict inflation, corporate power, excess demand, supply-side shocks

JEL classification: E12 E31 E52 O11