Inflation

Inflation is generally described as a sustained increase in the level of prices. It is challenging to identify which factors generate inflationary pressures. Interest in these factors is at the core of active policies on inflation control. These policies are not neutral with respect to the consequences that they have on the distribution of national income; since inflationary and anti-inflationary policies change the national income distribution, they may lead to conflicts between social groups and, at times, between states. A particular form of inflation is hyperinflation. Hyperinflation happens [Page 928]when policy makers lose control of the economy; it is a disruptive form of inflation that creates an unstable and unpredictable environment for people and firms.

Each nation has specific inflationary dynamics. This is because inflation is ...