Essays in Monetary Economics (Collected Works of Harry Johnson)

CHAPTER III

A SURVEY OF THEORIES OF INFLATION^*,1

I.  INTRODUCTION

For the purposes of this survey I define inflation as a sustained rise in prices. (There are other definitions which I shall discuss subsequently.) While the definition of inflation as a sustained rise in prices is a simple one, one encounters problems of some difficulty as soon as one tries to apply it in practice. The first such problem is that there may be price rises which are not inflationary but are merely part of the normal working of the competitive system. For example, it is obvious that if there is a crop failure or something of that kind, there will be some rise in prices ...