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Is inflation a monetary phenomenon only? A non monetarist episode of inflation: the Italian case

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  • Bertocco Giancarlo

    () (Department of Economics, University of Insubria, Italy)

Abstract

The publication of the second edition of Fratianni and Spinelli's monetary History of Italy offers the opportunity to analyze the causes behind the inflation pattern in Italy in the three decades preceding the entry of the country in the European Monetary Union. The two authors reconstruct the monetary history of Italy using the monetarist theory as an interpretation scheme, and assert that the Italian experience represents a significant confirmation of the validity of that theoretical model. This paper has two objectives. The first consists in showing the limits of the explanation of Italian inflation based on the monetarist theory; the second consists in providing an alternative explanation whereby the pattern of Italian inflation basically depends on the trend of production costs and on the behavior of companies in connection with mark-up definition. This paper is subdivided into two parts. In part I, the summary of the most significant aspects of the monetarist interpretation is followed by a review of its weak points. In part II, an alternative interpretation of the evolution of inflation in Italy is presented.

Suggested Citation

  • Bertocco Giancarlo, 2002. "Is inflation a monetary phenomenon only? A non monetarist episode of inflation: the Italian case," Economics and Quantitative Methods qf0209, Department of Economics, University of Insubria.
  • Handle: RePEc:ins:quaeco:qf0209
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    1. Mishkin, Frederic S., 1998. "International Experiences With Different Monetary Policy Regimes," Seminar Papers 648, Stockholm University, Institute for International Economic Studies.
    2. Allan H. Meltzer, 2001. "Money and monetary policy: an essay in honor of Darryl Francis," Review, Federal Reserve Bank of St. Louis, issue Jul, pages 23-32.
    3. Alex Cukierman, 1992. "Central Bank Strategy, Credibility, and Independence: Theory and Evidence," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262031981, January.
    4. Sun Bae Kim, 1991. "The independence of central banks," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, issue dec13.
    5. John B. Taylor, 1999. "Monetary Policy Rules," NBER Books, National Bureau of Economic Research, Inc, number tayl99-1.
    6. Fratianni,Michele & Spinelli,Franco, 2005. "A Monetary History of Italy," Cambridge Books, Cambridge University Press, number 9780521023450, May.
    7. McCallum, Bennett T., 1999. "Issues in the design of monetary policy rules," Handbook of Macroeconomics,in: J. B. Taylor & M. Woodford (ed.), Handbook of Macroeconomics, edition 1, volume 1, chapter 23, pages 1483-1530 Elsevier.
    8. David H. Romer, 2000. "Keynesian Macroeconomics without the LM Curve," Journal of Economic Perspectives, American Economic Association, vol. 14(2), pages 149-169, Spring.
    9. George T. McCandless & Warren E. Weber, 1995. "Some monetary facts," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Sum, pages 2-11.
    10. Gerald P. Dwyer & R. W. Hafer, 1988. "Is money irrelevant?," Review, Federal Reserve Bank of St. Louis, issue May, pages 3-17.
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