The Fiscal vs. Monetary Theory of Inflation
Published September 14, 2022
John Cochrane explains that the economic phenomenon of inflation concerns not relative price increases but rather an increase in all prices and wages. Cochrane then demonstrates how the government’s response to the COVID pandemic has caused the current 40-year highs of inflation. Finally, Cochrane shows how the fiscal and monetary theories explain inflation and where they differ.
- Why does the interest rate affect inflation?
- How does the fiscal theory of inflation differ from the monetary theory?