Paper presented at the Bruno Buozzi Foundation
Summary
Inflation must be curbed because hits mainly weaker (and likely poorer) economic agents, particularly employees and pensioners. Nevertheless, inflation is seldom a monetary phenomenon, thus monetary restriction does not reach the former objective (and possibly worsen and make permanent the effects of inflation) and is a purely symptomatic treatment. Income and antitrust policies may be effective because front the very roots of inflation (i.e.: a conflict on income distribution) directly. Industrial policy should reduce the dependency of Europe from key commodities ad services (particularly energy, micro-electronics, some semi-finished industrial goods) to prevent bottlenecks an external shock. For instance, European institutions should enact some policy tools such as a common procurement for key commodities and a stronger regulation of commodity markets. Also, reducing consumers’ information disadvantage on prices may help to slow down inflation.