Inflation in France Since the 1960s: A Post-Keynesian Interpretation Using the Conflict-Inflation Model

This paper analyses inflation in France since the early 1960s based on a standard conflicting-claims approach. Applying an empirical version of the conflict-inflation framework, we adduce evidence suggesting the theory is sound and can explain variations in inflation over the long run. We provide a method for estimating indicators of workers' and firms' bargaining power as well as their respective distributional aspirations. Based on the literature we identify four periods: the Fordist regime, the Neoliberal regime, and two transitional periods. Our results cast light on institutional regime changes. It is shown that the evolution from the Great Inflation to the Great Moderation was the consequence of a collapse in the bargaining power of workers (and of firms to a lesser extent); but the narrowing of the aspirations' gap because of workers' renouncement was also significant. This analysis allows us to highlight differences between the stagflation observed during the 1970s and the inflationary surge in the post-pandemic period (2021-2023).