100th Issue of the Review : The Nature of the Inflation Process

Abstract

This short essay begins by contrasting—in a rather broad brush manner—the two major types of explanation of the core of inflation in the United Kingdom. At one time these might have been labelled cost-push and demand-pull. It is now recognised, however, that the distinction cannot be made quite so sharply. It is perhaps better to speak of degrees of exogeneity of inflation—independence, that is, from other purely economic factors such as the pressure of demand and unemployment. The case of those who see important exogenous push elements in inflation may be labelled the eclectic—or, perhaps, the newspaper reader's—view. The other comprises the rather academic set of views associated with monetarist economists.