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Inflation and distribution during the post-COVID recovery: a Kaleckian approach

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  • Mark Setterfield

    (Department of Economics, New School for Social Research)

Abstract

The early stages of recovery from the recession induced by the COVID-19 pandemic have been accompanied by a marked increase in inflation in the US and elsewhere. Much has been made of this outcomes, and the economic distress associated with it, in popular discussion of the economy. This paper provides a Kaleckian conflicting-claims analysis of inflation during the post-COVID recovery, that distinguishes between rising wages, pandemic-related supply shocks, and corporate price-setting behaviour as sources of inflationary pressure. A key conclusion that arises from the co-determination of inflation and distributional outcomes in the Kaleckian framework is that distributional developments that have further disadvantaged working households, rather than inflation per se, are the chief source of recent economic distress - and should be the chief cause for concern among policy makers.

Suggested Citation

  • Mark Setterfield, 2022. "Inflation and distribution during the post-COVID recovery: a Kaleckian approach," Working Papers 2209, New School for Social Research, Department of Economics.
    • Handle: RePEc:new:wpaper:2209
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    Cited by:

    1. Mark Setterfield, 2024. "Managing the Discontent of the Losers Redux: A Future of Authoritarian Neoliberalism or Social Capitalism?," FMM Working Paper 98-2024, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    2. Montes Rojas Gabriel & Dvoskin Ariel & Feldman Germán, 2023. "Exchange-Rate Regime And Sectorial Profitability In A Small Open Economy: A Theoretical And Empirical Analysis Of Argentina (2016-2023)," Asociación Argentina de Economía Política: Working Papers 4673, Asociación Argentina de Economía Política.
    3. Wildauer, Rafael & Kohler, Karsten & Aboobaker, Adam & Guschanski, Alexander, 2023. "Energy price shocks, conflict inflation, and income distribution in a three-sector model," Energy Economics, Elsevier, vol. 127(PB).

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    More about this item

    Keywords

    Inflation; COVID-19; conflicting claims; wage share; income distribution;
    All these keywords.

    JEL classification:

    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
    • E11 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Marxian; Sraffian; Kaleckian
    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E64 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Incomes Policy; Price Policy

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