The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd


  • Michael Parkin
Reference work entry


This article essay reviews the theoretical and empirical literature on the causes and consequences of inflation – of a continuously rising price level and falling value of money. It describes the research agendas using the analytical distinction between anticipated inflation – an idealized situation in which prices are rising at a rate at which all economic agents expect them to rise – and unanticipated inflation. The literature on the effects of inflation on economic growth and unemployment, inflation in open economies, positive theories of central bank behavior, inflation and fiscal policy, and policies towards inflation including interest rate and inflation targeting receives particular attention.


Aggregate demand shocks Budget deficits Business cycles Capital–labour ratio Cash-in-advance constraint Central bank behaviour Commodity money Consumer Price Index Dynamic general equilibrium analysis Exchange rate determination Exchange rate regimes Fiscal theory of the price level Hyperinflation Incomplete information Inflation Inflation measurement Inflation targeting Interest rate rules International policy coordination Labour market contracts Labour unions Monetarism Monetary and fiscal policy Monetary base Monetary policy rules Money Money supply Monopolistic competition Mundell–Tobin effect Natural rate of unemployment Neutrality of money New classical theory New Keynesian macroeconomics Output gap Overlapping generations framework Overnight interest rate on inter-bank loans Phillips curve Precommitment Prices and incomes policies Rational expectations Real business cycles Reputation Sacrifice ratios Stagflation Sticky prices Sticky wages Stylized facts Substitutes and complements Superneutrality of money Targets and instruments Technological shocks Time inconsistency Time preference Velocity of circulation 

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Authors and Affiliations

  • Michael Parkin
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