COALITION DYNAMICS, SOCIAL NORMS, AND THE PERSISTENCE OF INFLATION

This study provides a formal model of the way in which economic institutions lead to chronic or persistent inflation. Of special interest is our focus on the coalition dynamics of inflation-the model is an alternative to dynamic noncooperative models. The results shed new light on the reasons why inflation follows different patterns in seemingly equivalent economies, and provides a new rationale for implementing heterodox policies to stabilize chronic inflation.