On Inflation and its Control
The nature of the inflationary process and the policy instruments for its control depend upon the institutional setting of a given country. These would naturally be different in a pure competitive economy from those in an economy with complete centralised planning. The institutional setting that we are concerned with is that of a mixed economy where government expenditures are more or less autonomous and planned, while the economic decisions in the private sector of the economy are governed by the price system as modified by the policy instruments of the Government. Of course, in a basic sense one set of decisions is not independent of the other set; the two interact as a result of the interdependence of the two subsystems.
KeywordsMonetary Policy Real Wage Money Supply Inflationary Pressure Price Rise
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- 1.See Nicholas Kaldor, ‘Monetary Policy, Economic Stability and Growth’, in his Essays on Economic Policy, vol. I (London, 1964) pp. 142–3.Google Scholar