A Reexamination of the Marxian Circuit of Capital: a New Look At Inflation.

The Aim of the Paper Is to Develop a New Approach to Inflation Based on Marx's Circuit of Capital and the Structural Price Equation. the Feedback Effect of Any Disequilibrium in the Circuit Has Some Important Consequences on the Price Equation. the Reduced Form of the Model Shows in Particular How the Exchange Rate and the Interest Rate Can Influence the General Price Level in Addition to the Other Determinants of the Price Equation, Namely the Productivity Variable and the Input Price Variable. This Constitutes a Major Improvement over Other Approaches to Inflation Where the Exchange Rate Fluctuation Is Neglected Because the Hypothesis of a Closed Economy Is Usually Assumed and the Definition of Money Is Reduced to a Numeraire with a Standard of Value Fixed by a Commodity Price Chosen to Be Equal to Unity.