• Sanskriti IAS - अखिल मूर्ति के निर्देशन में

Cantillon Effect

  • 11th August, 2022
  • The Cantillon Effect describes the uneven effect inflation has on goods and assets in an economy. Since new fiat money is injected into an economy at specific points, its effects are felt by different class and industries at different times.
  • This causes a distortion in relative prices and benefits certain parties while disadvantaging others because not all prices will rise by the same amount or at the same time.
  • As a result of the Cantillon Effect, inflation can be seen as a non-legislative and regressive tax on the purchasing power of citizens by the government.
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