ABSTRACT
Fear of inflation was one of the initial reasons for abandoning expansionary demand policies in advanced capitalist economies. Both Keynes and Kalecki, the founding fathers of the principle of effective demand, anticipated that inflation would probably arise under full employment. However, high and accelerating inflation came to be seen as a real danger in those economies only after the oil shocks of the 1970s. During that period inflation in highly developed economies took on features that resembled those prevailing in Latin American economies; which had been plagued by high rates of inflation throughout most of the post-World War II period. Fortunately, the period of high inflation did not last long in industrialized countries, and from the mid-1980s onwards the growth rate of prices declined to low levels. Somewhat later in most Latin American economies inflation also fell, and nowadays it is within a relatively low, onedigit figure.
