Inflazione e prezzi relativi (Neutrality of inflation)

Abstract

In the traditional Walrasian version of an economy with multi-sectoral exchange, the changes in relative prices and the general level of prices do not influence each other so that inflation is neutral. Various empirical studies in recent times, however, have invalidated this thesis. Unfortunately, they have not provided a well-defined alternative theoretical model, able to explain the formation of prices and rates of inflation in a context of multi-sectoral equilibrium (or disequilibrium). Therefore, some modern versions of neoclassical theory that seem to provide a multi-sectoral analytical foundation to the observed correlation between the dynamics of relative prices and the general level of prices are particularly worthy of interest. Their detailed examination, considered appropriate for both the novelty and complexity of the arguments, and their empirical data on the last two decades in Italy are the subject of the present work.

JEL: E31