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The Political Economy of Low Inflation
Author(s) -
Kirshner Jonathan
Publication year - 2001
Publication title -
journal of economic surveys
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.657
H-Index - 92
eISSN - 1467-6419
pISSN - 0950-0804
DOI - 10.1111/1467-6419.00132
Subject(s) - economics , inflation (cosmology) , politics , macroeconomics , keynesian economics , neutrality , monetary policy , international political economy , political economy , political science , law , physics , theoretical physics
What are the politics of inflation? This question is usually raised solely when inflation rates are high. All levels of inflation, however, high and low, are the outcome of political conflicts. But no current approach to the study of inflation — sociological, neoclassical, modern political economy — adequately captures the full range of political issues at stake, and this leads to problems for both theory and policy. This paper critiques the existing perspectives on inflation and then focuses on three theoretical issues raised by those critiques: the economic costs of inflation; the concept of monetary neutrality from economic and political perspectives; and the importance of disaggregating economic growth statistics. Finally, the paper introduces and explores a contending approach to the analysis of the political economy of inflation: a ‘micro‐politics’ perspective. This approach is the only one to address the politics of low inflation, which is of great significance for contemporary political economy.