Are nowadays fears of inflation justified?


Are nowadays fears of inflation justified? Building an institutionalist analysis focused on the Eurozone and Brazilian situations

Small Group Project 2022-23

The fear of inflation is back! The recent worldwide rise of inflation feeds the fears of the resurgence of the 1970s stagflation and may lead economic policymakers to abandon shortly expansionary fiscal and monetary policies. 
The project aims to understand inflation dynamics by adopting an institutionalist and Post-Keynesian framework. Contrary to the standard explanations of inflation, this framework is more realistic because it assumes that money is endogenous and rejects the existence of a “natural” full-employment equilibrium of the economy. Therefore, in the framework that we adopt, inflation is the consequence of the distributive conflict and of institutional and conventional arrangements. 

We propose to study a core economy (Eurozone) and a so-called ‘emerging’ economy, Brazil. 

To assess the current inflation risks in these two economies, we’ll mobilize a typology of inflation regimes that we have recently developed, and we’ll have to study several variables such as the bargaining power, the market power, the level of wages targeted by workers or by firms, the presence (or not) of indexation and even the pass-through effects of import prices. Adopting a conflicting-claim approach to inflation implies that the research is opened to interdisciplinarity within the social sciences. The empirical work that will be performed may cause the evolution of our theoretical typology. In this sense, the project has a double ambition: an empirical aspect (understanding the inflation dynamics in two different economies) and a theoretical aspect (testing the enforceability of a theoretical framework).
During the period of the project, we want to produce two articles (one on Eurozone, one on Brazil). The writing of these papers would be facilitated by the possibility of organizing in-person work-in-pair sessions. But we want to build the foundations of an international and interdisciplinary workgroup.

Contacting Fellows

If you would like to contact any of our Fellows to discuss their ISRF-funded work, please contact Dr Lars Cornelissen (Academic Editor) in the first instance, at