Inflation and Balanced Growth

Abstract

IT has often been observed that, while nineteenth-century economic development was, by and large, achieved without inflation, or at least without chronic and acute inflation, present-day development, in the vast majority of countries, seems to have as its natural accompaniment a continuous inflationary pressure translated, more often than not, into open and protracted inflation. The question that suggests itself is whether this is due to mere monetary mismanagement, or whether the trouble lies deeper. Are there institutional, social, or structural factors that render today’s development process peculiarly vulnerable to inflation?