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Cost-push and conflict inflation: the case of France between 2021 and 2023

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  • Dimitri Goldztejn

Abstract

In this paper, we analyse the recent inflation period (2021-2023) in the case of France. We first study the cost-push dimension of inflation with an Input-Output price model (Leontief price model) using the methodology developed by Weber et al (2024) for the USA, which we extend to include the sensitivity of the CPI to import prices; this allows us to identify, in the case of France, the 'systemically significant' sectors as defined by Weber et al (2024) (after Hockett & Omarova (2016)). In the second part, based on detailed National Accounts data, we study the evolution of price components and value sharing, accounting for the sector heterogeneity of the dynamics. In this section, we also provide elements to the debate on 'profit inflation'. Based on the results obtained, it seems that the term 'cost-push-profit-led inflation' (Nikiforos et al (2024)) appropriately describes the phenomenon observed in France over the period studied. These results call for a rethinking and renewing of the policy toolbox against inflation. These considerations prove particularly relevant in the context of ecological transition, because of the various issues it raises: in terms of energy, raw materials and provisioning (Miller et al (2023)), but also of satisfying essential needs through the production and distribution of specific goods and services in a post-growth context (Doyal & Gough (1984), Briens (2015), Millward-Hopkins (2020), Durand et al (2024)).

Suggested Citation

  • Dimitri Goldztejn, 2024. "Cost-push and conflict inflation: the case of France between 2021 and 2023," FMM Working Paper 110-2024, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    • Handle: RePEc:imk:fmmpap:110-2024
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    References listed on IDEAS

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    1. Xavier Jaravel & Isabelle Mejean & Xavier Ragot, 2023. "Les politiques publiques au défi du retour de l’inflation," Post-Print hal-04524763, HAL.
    2. Giacomo Cucignatto & Nadia Garbellini & Facund Fora Alcalde, 2023. "Profit-led or cost-led inflation? Propagation effects through the EU inter-industry network," PSL Quarterly Review, Economia civile, vol. 76(306), pages 261-276.
    3. Robert C. Hockett & Saule T. Omarova, 2016. "Systemically Significant Prices," Journal of Financial Regulation, Oxford University Press, vol. 2(1), pages 1-20.
    4. Rebecca Freeman & Richard Baldwin, 2022. "Risks and Global Supply Chains: What We Know and What We Need to Know," Annual Review of Economics, Annual Reviews, vol. 14(1), pages 153-180, August.
    5. Mr. Niels-Jakob H Hansen & Mr. Frederik G Toscani & Jing Zhou, 2023. "Euro Area Inflation after the Pandemic and Energy Shock: Import Prices, Profits and Wages," IMF Working Papers 2023/131, International Monetary Fund.
    6. Fabrizio Colonna & Roberto Torrini & Eliana Viviano, 2023. "The profit share and firm markup: how to interpret them?," Questioni di Economia e Finanza (Occasional Papers) 770, Bank of Italy, Economic Research and International Relations Area.
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    Keywords

    France; inflation; profit inflation;
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