Money and Inflation

Abstract

This paper explores theoretical approaches to money and inflation and examines the link between the two.

I start with a review of the modern orthodox approach, which presumes that the money supply is determined by government policy and focuses on controlling inflation. I then describe and contrast recent Post Keynesian work on money, which is based on a neo-Chartalist, or state money, approach. Finally, I link the neo-Chartalist approach more directly to PK theories of money, prices, and inflation.

Keywords: inflation, money supply, state money, neo-Chartalism, prices