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... discusses how mark-up pricing works in economies dominated by fix-price markets and firms with substantial market power. Most neoclassically inspired work on inflation is trying to explain why there is ongoing and persistent inflation in economies dominated by flex-price markets where firms typically have little market power ...

... but, historically, those types of economies more normally had periods of inflation and deflation. With a currency with an intrinsic value, the average tendency would be toward inflation, as the sovereign debased the currency in order to cope with the repeated liquidit crises caused by a currency with an intrinsic value, but they did not have the year after year for decades inflation typical of economies dominated by fix-price markets with substantial market power by producers acting as price makers.

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Fri Nov 19th, 2010 at 05:51:01 PM EST
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