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Post-Keynesian Economics: New Foundations by Marc Lavoie Chapter 8: Inflation Theory

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  • Julia Braga
  • Franklin Serrano

Abstract

The conflicting claims approach to the theory of inflation so thoroughly surveyed and well presented in Chapter 8 of Lavoie's [(2022). Post-Keynesian Economics. New Foundations. Cheltenham, UK: Edward Elgar Publishing] book is deservedly becoming increasingly consensual among heterodox (and even some notable mainstream) macroeconomists. However, the relevance of a concept (and the very existence of) a single NAIRU (Non-Accelerating Inflation Rate of Unemployment) derived consistently from the very premises of the conflicting claims approach is still very controversial. In this review article, we will be to argue that a NAIRU is not really useful for the conflicting claims approach. The key aspects explored here are: (1) the different roles of hysteresis in the output and labor markets; (2) the assumptions concerning real profit markups of firms; and (3) the extent to which money wage increases actually incorporate past (or expected) inflation. We also add some remarks regarding the role of changes in international commodity prices and nominal exchange rates that further illustrate the necessary relation between conflicting claims inflation and the theory of distribution and relative prices.

Suggested Citation

  • Julia Braga & Franklin Serrano, 2023. "Post-Keynesian Economics: New Foundations by Marc Lavoie Chapter 8: Inflation Theory," Review of Political Economy, Taylor & Francis Journals, vol. 35(4), pages 1096-1108, October.
    • Handle: RePEc:taf:revpoe:v:35:y:2023:i:4:p:1096-1108
    DOI: 10.1080/09538259.2023.2222680
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    Cited by:

    1. Hein, Eckhard, 2023. "Inflation is always and everywhere … a conflict phenomenon: Post-Keynesian inflation theory and energy price driven conflict inflation," IPE Working Papers 224/2023, Berlin School of Economics and Law, Institute for International Political Economy (IPE).

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