On Inertia, Social Conflict, and the Structuralist Analysis of Inflation

This paper discusses some issues in the interpretation of inflation within recent structuralist models, giving special attention to the different views of the precise role of conflict in inflation that, in turn, can be found among them. The first section of the paper is devoted to a presentation of the common features shared by most recent structuralist views, essentially those that follow from a model of lagged wage indexation, while leaving the precise role of social conflict in inflation unspecified. The author then addresses the role of social conflict and its implications in sections II and III. The discussion there centers mainly on two views of social conflict and inertial elements. We argue that, in their pure versions, these two views can be seen as limiting cases of a whole family of inflation models and that the differences between them—which can have remarkable policy implications—turn out to depend on the presence, and speed, of adaptation processes in the determination of economic agents’ targets. A final section sets the previous discussion in a broader context by comparing structuralist views with other inflation theories.