The inflationary phenomenon has sparked growing interest globally in recent years, especially due to the measures adopted to confront the pandemic and recent international conflicts.
Throughout economic history, various theories have been developed to explain the causes and spread of inflation from a theoretical approach.
In this article, we will take a tour of the most important and influential theories that have addressed this phenomenon.
It is relevant to note that most of the theories reviewed in this article ceased their development in the 90s.
This is because, from that time until the post-pandemic scenario, most countries have managed to control the inflation problem.
Despite the differences between the theories, they all recognize the importance of the monetary component in explaining the general increase in prices.
The monetary issue is presented as a determining factor, although not necessarily the only one, depending on the school or approach adopted.
However, before delving into theoretical explanations, it is necessary to familiarize ourselves with the vocabulary related to inflation.
This article addresses concepts associated with the function of currency, which will allow us to understand how money facilitates the exchange of goods and services, provides a measure of value and allows savings.
Additionally, we will explore the different types of widespread price movements, such as inflation, deflation, disinflation, reflation, and stagflation.
Understanding these terms will help us contextualize and distinguish the different economic scenarios related to the evolution of prices.
The theoretical perspectives that have attempted to explain this complex phenomenon are varied and impossible to cover in a single text.
In our selection we will include the foundations of the theories that we consider most relevant:
- the quantity theory of money (perhaps the best known to a wide public),
- Keynes' monetary theory, the Phillips curve,
- the neoclassical-Keynesian synthesis, the monetary approach to the balance of payments, the new classical macroeconomics
- and the structuralist approach.