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A Latticework of Inflation Models

Author

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  • Mayer Thomas

    (Flossbach von Storch Research Institute, Ottoplatz 1, 50679 Köln, Germany)

Abstract

Economists have repeatedly developed various theories for the origin of inflation and claimed that these theories were always valid everywhere. But history has shown that the theories – although they are useful – were only valid during certain time periods and under special circumstances. What is therefore needed is a system that assigns the various explanations of inflation to the specific circumstances for which they are particularly suited. This paper sets out such a system. Borrowing from Charlie Munger's (2005. Poor Charlie’s Almanack. Stripe Press), I call it a “latticework of inflation models”. In the first section 1 map the various inflation theories and then discuss and relate them to each other in the following sections. I find that during and after the pandemic several drivers of inflation were at work, so that several theories of inflation instead of just one allow a more comprehensive explanation of the inflation experienced during this period. The “latticework of inflation models” is also better suited than just one model for investigating the outlook for inflation.

Suggested Citation

  • Mayer Thomas, 2024. "A Latticework of Inflation Models," The Economists' Voice, De Gruyter, vol. 21(1), pages 7-28.
    • Handle: RePEc:bpj:evoice:v:21:y:2024:i:1:p:7-28:n:1012
    DOI: 10.1515/ev-2024-0028
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    References listed on IDEAS

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    More about this item

    Keywords

    price level; inflation; deflation; money supply; credit; money multipliers; monetary policy; central banks and their policies;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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