The Inflationary Process : The Administered-pricing Approach

  • Ajit K. Dasgupta
  • A. J. Hagger


A prominent feature of the model of the inflationary process analysed in the previous chapter is that it explains the continuous upward movement in the general price level without reference to the way in which individual prices are actually fixed. The price equation of that model merely says that the percentage increase in the price index in any period is equal to the excess of aggregate demand over real gross domestic product in the period, as a percentage of real gross domestic product. This could be taken to mean that prices are fixed so as to clear the market. But it could also be taken to mean that prices are fixed with some quite different objective in view (e.g. so as to secure a particular absolute profit margin or a particular relative profit margin) and that the result is as if market-clearing were the rule. There is thus a definite view as to the results of price fixation, but none as to the methods.


Wage Rate Trade Union Excess Demand Price Stability Wage Earning 
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Copyright information

© Ajit K. Dasgupta and A. J. Hagger 1971

Authors and Affiliations

  • Ajit K. Dasgupta
    • 1
  • A. J. Hagger
    • 2
  1. 1.Sir George Williams UniversityMontrealCanada
  2. 2.University of TasmaniaAustralia

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