Shaikh’s Theory of Inflation: Empirical Evidence from European Countries (2001–20)

Özden O., Bolkol H. K.

REVIEW OF POLITICAL ECONOMY, vol.36, no.4, pp.1536-1556, 2023 (ESCI, Scopus) identifier identifier

  • Publication Type: Article / Article
  • Volume: 36 Issue: 4
  • Publication Date: 2023
  • Doi Number: 10.1080/09538259.2023.2196938
  • Journal Name: REVIEW OF POLITICAL ECONOMY
  • Journal Indexes: Scopus, Emerging Sources Citation Index (ESCI), Academic Search Premier, IBZ Online, International Bibliography of Social Sciences, ABI/INFORM, Business Source Elite, Business Source Premier, EconLit, PAIS International, Political Science Complete, Social services abstracts, Sociological abstracts, Worldwide Political Science Abstracts
  • Page Numbers: pp.1536-1556
  • Keywords: Anwar Shaikh, classical theory of inflation, endogenous money, GMM, UNIT-ROOT TESTS, PANEL-DATA, DYNAMICS, GMM, ENDOGENEITY
  • Marmara University Affiliated: Yes

Abstract

Anwar Shaikh has proposed the classical theory of inflation in his recent book Capitalism, Competition, Conflict, Crisis. Even though it is a relevant and well-founded heterodox theory, the empirical literature on the subject is scanty. In this article, we empirically evaluate the explanatory capabilities of Shaikh's theory of inflation for the case of Europe. We constructed GMM and Fixed Effects models for the panel of 23 European countries over the period 2001-20. The overall results demonstrated that Shaikh's classical theory of inflation generated empirically successful results in explaining the supply dynamics of European inflation, while it produced no statistically significant effect on the demand dynamics of inflation due to the European inflation level, as expected.