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Splitting it between fix price and flex price impulses helps, especially timelining them separately.

If its on fix price, you of course have to look for stable, falling or rising mark-ups, stable mark-ups indicating cost driven inflation, rising mark-ups indicating growing market power, volatile mark-ups indicating product/input price spirals.

If its flex price, you look for the effects that neoclassical imagine to be the whole picture: shortages, buffer stocks rising or falling, static sales volume indicating demand driven inflation, falling sales volume indicating supply driven inflation.

The problem with trying to sort out causes of inflation independent of understanding what is going on in the economy is that monetary flows are information simplifiers ~ that's the power of monetary production economies for complex industrial economies, after all ~ so that you lose some of the explanatory leverage that you have when looking directly at the industrial activity that is reflected in different rates of product price inflation in different sectors of the economy.

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 11:17:29 PM EST
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