endogeous money and stagflation

["Kazuhiro Kurose" <kurose@xxxxxxxxxxxxxxxxxxxxxx>]

Dear Everyone

I have thought about inflation for a few weeks. Orthodox economists think that inflation results from an increase in
money. In other words, the causality runs from M to P in the quantity equation MV=PY.
But Post-Keynesian never agree with this. Because Post-Keynesian regards money as an endogenous variable.　Then
inflation results not from monetary disturbance but from real factors. I think that they agree with the thought that
inflation will be caused in the circumstances that the economy has already reached to full employment and full capacity
utilization. I can get this thought, which is similar to that of Banking School.
But it is the point like below that I can't understand. Why did we experience stagflation in 1970s? In those days, there
was no economy in the world which could sustain the full employment and full capacity utilization. Nonetheless we
experienced hyper-inflation.
In Monetarist view, failure of monetary policy, i.e.. central bank, causes inflation. But Post-Keynesian can't agree
with this. Then how do Post-Keynesian account for stagflation?

Sincerely

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  Kazuhiro Kurose
  Graduate School of Economics and Business
  Administration, Hokkaido University
  Kita 9 Nishi 7, Kita-Ku, Sapporo, Japan
  060-0809
    TEL: +81-11-716-2111 ex:2786
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