Sellers' Inflation and Distributive Conflict
Lessons from the Post-Covid Recovery
Bibliographic Data
| ID | 12230331 |
|---|---|
| Authors | Ettore Gallo (0000-0002-4642-4779, University of Parma, Parma, Italy, corresponding author), Louis‐philippe Rochon (0000-0002-8542-7497, Laurentian University, Sudbury, Canada) |
| Year | 2024 |
| Volume | 36 |
| Issue | 4 |
| Pages | 1331-1350 |
| Publication date | 2024-06-27 |
| Peer Reviewed | Yes |
| Open Access | No |
| Type | ARTICLE |
| Venue | Review of Political Economy (JOURNAL) |
| Journal identifiers | ISSN: 0953-8259 • E-ISSN: 1465-3982 |
| Publisher | Taylor & Francis (PUBLISHER • GB) |
| DOI | 10.1080/09538259.2024.2358130 |
| OpenAlex | W4400087055 |
| Language | EN |
| Citations received | 4 |
| References cited | 30 |
The paper offers a post-Keynesian explanation of the soaring inflation experienced during the post-COVID recovery, coherent both at the microeconomic and macroeconomic levels. The microeconomic argument is rooted on the premise that price-making firms consider both their costs and their desired share of profits when setting prices. To defend profit margins in the aftermath of the pandemic, the initial cost-push shock was passed to consumers through higher prices; in a second phase, some firms, particularly in more highly concentrated and systemically significant sectors, benefited from the post-pandemic permissive pricing environment to increase their price mark-ups, leading to temporary profit-fueled inflation following the cost-push shock. This microeconomic explanation is compatible with the macroeconomic notion of a stable inflation barrier. For a given quantity of real output, it is shown that if profit earners defend their share of income following a cost-push, this will produce a one-time price increase, with inflation becoming more persistent if the target adapts endogenously — i.e., if the aggregate mark-up changes. The paper contrasts the notion of a wage-price spiral with that of a profit-price sink, arguing that sellers' inflation is a real — albeit temporary phenomenon
2019-20 coronavirus outbreak · Coronavirus disease 2019 (COVID-19 · Distributive property · Economics · Inflation (cosmology · Keynesian economics · Macroeconomics · Monetary economics · Severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2 · Banking stability, regulation, efficiency · Economic theories and models · Medicine · Internal Medicine · Virology
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Essays in the Theory of Employment
| Unique citing works | 4 |
|---|---|
| Citations per year | 2 |
| Citation span | 2024 - 2025 (2) |
| Citation velocity | recent |
| Highly cited | No |
| Citation types | Neutral: 4 |