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A Virtual Economics Laboratory: What Generated High Inflation? 14 Different Explanations to One Inflation Period

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  • Yair Barak

    (Cohn Institute for the History and Philosophy of Science and Ideas, Tel Aviv University, Tel Aviv, Israel)

Abstract

A high inflation period of seven years (1978-1985) in Israel, which turned into a hyperinflation, puzzled Israeli economists, who tried to understand its causes and mechanisms. As a result, they provided fourteen different explanations. Although all of the explanations were based on the same data, the researchers’ conclusions were either different or contradictory. This situation provides a virtual laboratory for the study of the ways and methods of economic thought; it is a classical Ceteris patribus situation. This laboratory further raises other subjects and questions. Are there principal differences between the economists' explanations? Is it possible to classify these differences? How do economic explanations for inflation differ from non-economic ones? In this article, I classified thirteen economic studies and one non-economic study into five clusters. This was the methodological tool used to inquire into the economic thought in this virtual laboratory.

Suggested Citation

  • Yair Barak, 2023. "A Virtual Economics Laboratory: What Generated High Inflation? 14 Different Explanations to One Inflation Period," Journal of Economic Analysis, Anser Press, vol. 2(2), pages 34-55, April.
    • Handle: RePEc:bba:j00001:v:2:y:2023:i:2:p:34-55:d:36
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    References listed on IDEAS

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    2. Gordon, Robert J, 1975. "The Demand for and Supply of Inflation," Journal of Law and Economics, University of Chicago Press, vol. 18(3), pages 807-836, December.
    3. Gordon, Robert J, 1975. "The Demand for and Supply of Inflation: Reply to Brunner's Comments," Journal of Law and Economics, University of Chicago Press, vol. 18(3), pages 871-874, December.
    4. Don Patinkin, 1993. "Israel's Stabilization Program of 1985, or Some Simple Truths of Monetary Theory," Journal of Economic Perspectives, American Economic Association, vol. 7(2), pages 103-128, Spring.
    5. Thomas Sargent & Joseph Zeira, 2011. "Israel 1983: A bout of unpleasant monetarist arithmetic?," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 14(3), pages 419-431, July.
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