THE DEMAND FOR AND SUPPLY OF INFLATION.

The analysis of the political economy of inflation can be divided into two major sub-topics, namely, the demand for and supply of inflation. Pressures for the government to pursue or not to pursue a more inflationary policy emanates from entities such as taxpayers who resist tax increases made necessary by increases in expenditures, beneficiaries of government programs who resist expenditure reductions and groups attempting to obtain an increase in their share of national income. The main alternatives to the two-sided demand-supply approach to inflation theory are the hard-line monetarist and hard-line cost-push frameworks. Theoretical and empirical support for the political business cycle, or the deliberate generation by vote-buying politicians of election-synchronized economic expansion, is found as one of several determinants of the supply of inflation.