Monetary Tightening without Disinflation: A Post-Keynesian Account of Cost-Push Pressures, Mark-Up Dynamics, and Conflict Inflation

Monetary Tightening without Disinflation: A Post-Keynesian Account of Cost-Push Pressures, Mark-Up Dynamics, and Conflict Inflation | Research Square window.SnipcartSettings = { analytics: { enabled: false } }; (function() { var accessVector = localStorage.getItem('access_vector') || ''; window.dataLayer = window.dataLayer || []; if (accessVector) { window.dataLayer.push({ user: { profile: { profileInfo: { snid: accessVector } } } }); } })(); (function(w,d,s,l,i){w[l]=w[l]||[];w[l].push({'gtm.start':new Date().getTime(),event:'gtm.js'});var f=d.getElementsByTagName(s)[0],j=d.createElement(s),dl=l!='dataLayer'?'&l='+l:'';j.async=true;j.src='https://www.googletagmanager.com/gtm.js?id='+i+dl;f.parentNode.insertBefore(j,f);})(window,document,'script','dataLayer','GTM-K279D39R'); Browse Preprints In Review Journals COVID-19 Preprints AJE Video Bytes Research Tools Research Promotion AJE Professional Editing AJE Rubriq About Preprint Platform In Review Editorial Policies Our Team Advisory Board Help Center Sign In Submit a Preprint Cite Share Download PDF Research Article Monetary Tightening without Disinflation: A Post-Keynesian Account of Cost-Push Pressures, Mark-Up Dynamics, and Conflict Inflation utku altunöz This is a preprint; it has not been peer reviewed by a journal. https://doi.org/ 10.21203/rs.3.rs-8882496/v1 This work is licensed under a CC BY 4.0 License Status: Posted Version 1 posted You are reading this latest preprint version Abstract This paper examines why sustained monetary tightening can coexist with slow disinflation and persistent inflationary pressures. Focusing on the Euro Area over the period 1999Q1–2024Q4, the analysis develops and tests a post-Keynesian explanation centered on administered pricing, endogenous mark-up setting, and distributional conflict. In contrast to demand-driven Phillips-curve interpretations, inflation is modeled as the outcome of cost propagation, profit-claim dynamics, and monetary policy operating through both demand and costs. Using a panel error-correction framework, the empirical results show that energy and import prices are the dominant drivers of inflation, while profit-share measures remain statistically significant even after controlling for costs. The policy interest rate plays a limited role in anchoring inflation in the long run. Moreover, a regime-based interaction reveals that during sustained tightening cycles, policy-rate increases are associated with weaker disinflation dynamics and, in the short run, mildly inflationary effects once cost and mark-up channels are accounted for. These findings support the notion of “monetary tightening without disinflation” as an endogenous outcome of administered pricing and distributional conflict, rather than as evidence of insufficient policy restrictiveness. The results suggest that when inflation is predominantly cost- and conflict-driven, effective stabilization requires complementary policy tools beyond interest-rate hikes. JEL Classification: E31, E52, E58, D33, L11 Monetary tightening Administered prices Mark-up pricing Conflict inflation Cost-push inflation Euro Area Full Text Additional Declarations No competing interests reported. Cite Share Download PDF Status: Posted Version 1 posted You are reading this latest preprint version Research Square lets you share your work early, gain feedback from the community, and start making changes to your manuscript prior to peer review in a journal. As a division of Research Square Company, we’re committed to making research communication faster, fairer, and more useful. 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Also discoverable on Platform About Our Team In Review Editorial Policies Advisory Board Help Center Resources Author Services Accessibility API Access RSS feed Manage Cookie Preferences © Research Square 2026 | ISSN 2693-5015 (online) Privacy Policy Terms of Service Do Not Sell My Personal Information {"props":{"pageProps":{"initialData":{"identity":"rs-8882496","acceptedTermsAndConditions":true,"allowDirectSubmit":true,"archivedVersions":[],"articleType":"Research Article","associatedPublications":[],"authors":[{"id":599829584,"identity":"d9e33dcc-0e3e-455e-a980-acdc5ed97a59","order_by":0,"name":"utku altunöz","email":"data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAAZAAAAAyAQMAAABI0h/eAAAABlBMVEX///8AAABVwtN+AAAACXBIWXMAAA7EAAAOxAGVKw4bAAAAv0lEQVRIiWNgGAWjYFACNiAusEkAsxMKiNIB0mKQlgDWmmBAvJbDEC0MxGgxuN+WJvHD4Hwev3x34ocHBgzy/GIHCGg5xnZMssfgdrFkG+9mCaDDDGfOTiCkhb1NgsfgduKGY7wbQFoSDG4ToUXyj8E5kJbNP4jUwnZMmsfgAEjLNuJskTyWlmwtY5CcOLMtd5tFgoEEYb/wHT5mePNNhV1iP/PZzTd/VNjI80sT0IIOJEhTPgpGwSgYBaMAOwAAZz1ATEh5At4AAAAASUVORK5CYII=","orcid":"","institution":"Sinop University","correspondingAuthor":true,"prefix":"","firstName":"utku","middleName":"","lastName":"altunöz","suffix":""}],"badges":[],"createdAt":"2026-02-14 20:53:13","currentVersionCode":1,"declarations":"","doi":"10.21203/rs.3.rs-8882496/v1","doiUrl":"https://doi.org/10.21203/rs.3.rs-8882496/v1","draftVersion":[],"editorialEvents":[],"editorialNote":"","failedWorkflow":false,"files":[{"id":104402119,"identity":"45d5c415-88fb-4f76-b46d-d9a22f2dd194","added_by":"auto","created_at":"2026-03-11 12:14:22","extension":"pdf","order_by":1,"title":"","display":"","copyAsset":false,"role":"manuscript-pdf","size":440005,"visible":true,"origin":"","legend":"","description":"","filename":"MonetaryTighteningwithoutDisinflation.pdf","url":"https://assets-eu.researchsquare.com/files/rs-8882496/v1_covered_665d5f3c-e013-4fe2-90b7-a483423510ee.pdf"}],"financialInterests":"No competing interests reported.","formattedTitle":"Monetary Tightening without Disinflation: A Post-Keynesian Account of Cost-Push Pressures, Mark-Up Dynamics, and Conflict Inflation","fulltext":[],"fulltextSource":"","fullText":"","funders":[],"hasAdminPriorityOnWorkflow":false,"hasManuscriptDocX":false,"hasOptedInToPreprint":true,"hasPassedJournalQc":"","hasAnyPriority":false,"hideJournal":true,"highlight":"","institution":"","isAcceptedByJournal":true,"isAuthorSuppliedPdf":true,"isDeskRejected":"","isHiddenFromSearch":false,"isInQc":false,"isInWorkflow":false,"isPdf":true,"isPdfUpToDate":true,"isWithdrawnOrRetracted":false,"journal":{"display":true,"email":"[email protected]","identity":"researchsquare","isNatureJournal":false,"hasQc":true,"allowDirectSubmit":true,"externalIdentity":"","sideBox":"","snPcode":"","submissionUrl":"/submission","title":"Research Square","twitterHandle":"researchsquare","acdcEnabled":true,"dfaEnabled":false,"editorialSystem":"","reportingPortfolio":"","inReviewEnabled":false,"inReviewRevisionsEnabled":true},"keywords":"Monetary tightening, Administered prices, Mark-up pricing, Conflict inflation, Cost-push inflation, Euro Area","lastPublishedDoi":"10.21203/rs.3.rs-8882496/v1","lastPublishedDoiUrl":"https://doi.org/10.21203/rs.3.rs-8882496/v1","license":{"name":"CC BY 4.0","url":"https://creativecommons.org/licenses/by/4.0/"},"manuscriptAbstract":"\u003cp\u003eThis paper examines why sustained monetary tightening can coexist with slow disinflation and persistent inflationary pressures. 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