Inflation in Theory and Practice: A Comprehensive Review of the Literature From the Great Inflation to the 2020s Surge

The post‐pandemic inflationary spike brought inflation back to the forefront of academic research. In the debate about the origin and nature of the 2020s inflation, economists have been divided into the following two main camps: the demand‐pull camp, which attributed inflation to excess demand and linked it to fiscal and monetary stimulus put forth after the pandemic; and the cost‐push camp, which assigns a greater role to supply disruptions and sectoral price shocks. This paper provides a comprehensive review of this debate, covering both theoretical and empirical contributions and tracing the origin of the intellectual divide. In doing so, it shows that demand‐pull and cost‐push interpretations have shaped the inflation debate since at least the Great Inflation of the 1970s and that, while the demand‐pull interpretation became dominant from the 1980s onwards—reshaping macroeconomic theory and anchoring the policy framework around central bank independence and inflation targeting, the post‐pandemic inflationary episode has renewed interest in cost‐push mechanisms, generating a growing body of empirical evidence on supply‐side drivers and prompting a partial, if uneven, acknowledgement of these factors in policy responses.