Inflation in the Transition Economies: the post-Keynesian view

Abstract

The article deals with the relevance of post-Keynesian theory of conflict inflation for the transition economies. While the conflict inflation theory does not have any explanatory tower for the performance of socialist economies and for their immediate post-socialist behaviour. it becomes relevant in later phases of their transition. The reason lies in the development of labour market institutions and in the establishment of collective bargaining. The inflation rate is determined by the real wage aspiration gap and by the bargaining power of the capital and labour side. The pervasive role of the state in setting target wage guidelines and a weak position of employers' organizations and trade unions as typical features of transitional tripartism lead to a relatively low rate of conflict inflation. However, this type of inflation is not responsive to monetarist anti-inflationary measures, which successfully cured the hyperinflationary tendencies in early transitional stages. Conflicting-claims inflation requires a more delicate approach. based on incomes policy measures and growth incentives.

The Road to Financialization in Central and Eastern Europe: The Early Policies and Politics of Stabilizing Transition

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“…The views of neoclassical economics reverberate the monetarists theory that attribute inflation rate to excessive growth in exogenous money supply. In controversy, the post-Keynesian economic theory considers money supply to be an endogenous variable (Susjan and Lah, 1997). Therefore, it appears that inflation can emerge from either demand-side or supply-side depending on the outcome of key macroeconomic variables.…”

Hyperinflation argentine de 1989 : une interprétation post-keynésienne

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