The aim of this book is to give a comprehensive treatment of the problem of inflation. Thus the questions to be examined are: What are the causes of inflation? Why does it matter? How can it be stopped, or at least restrained? What other problems arise when action is taken to restrain inflation? Are these other problems so serious that it would be better, on balance, to allow a certain degree of inflation coupled with a comparatively small dose of these other problems than to have no inflation at all coupled with a somewhat larger dose of these other problems? If so, how large is the ‘certain degree’ of inflation that will have to be tolerated if the undesirable consequences of restraining inflation are to be kept within desirable limits?
KeywordsPrice Index Price Increase Australian Economy Excess Demand Current Prex
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- 1.This was the definition advocated by Lerner, for example: see A. P. Lerner, ‘The Inflationary Process’, Review of Economics and Statistics (August 1949) pp. 193–5.Google Scholar
- 2.See F. W. Paish, Rise and Fall of Incomes Policy (London: Institute of Economic Affairs, 1969) p. 20.Google Scholar
- 3.See Ralph Turvey, ‘Theory of Inflation in a Closed Economy’, Economic Journal (September 1951) pp. 531–5.Google Scholar
- 4.Ibid. p. 533; italics mine.Google Scholar
- 5.Ibid. pp. 534-5; italics omitted.Google Scholar
- 6.These are described in Australian National Accounts: National Income and Expenditure, 1972–73 (Canberra: Australian Bureau of Statistics, 1974) appendix B.Google Scholar
- 7.This measure was first used in an international study of inflation made some ten years ago. See The Problem of Rising Prices (Paris: Organisation for European Economic Co-operation, 1961) pp. 83–91.Google Scholar
- 8.See Sir John Hicks, ‘Expected Inflation’, Three Banks Review (September 1970) p. 21.Google Scholar
- 9.Ibid. pp. 18-19.Google Scholar
- 10.See Arthur M. Okun, ‘The Mirage of Steady Inflation’, Brookings Papers on Economic Activity, no. 2 (1971) p. 487.Google Scholar