The Phillips Curve and Demand-Pull Inflation

Abstract

Within Post Keynesian economics, the standing of the Phillips curve has tended to be somewhat ambiguous. In part, this ambiguity reflects the uncertain standing of the Phillips curve in the profession at large, and in part it reflects the fact that Post Keynesians have been eclectic in theorizing about inflation. In particular, whereas the mainstream of professional economists has come to see inflation as exclusively caused by excessive money growth, Post Keynesians also emphasize the significance of labor market conflict over the distribution of income. These two approaches to the theory of inflation represent lineal developments of earlier (1950s) interpretations of inflation in terms of “demand-pull” and “cost-push” factors: thus, the new classical money growth approach may be identified as a particular expression of the demand-pull perspective, while the Post Keynesian distributional conflict approach can be identified with the cost-push perspective.

Part of this chapter appeared in “Escalators and Elevators: A Phillips Curve for Keynesians”, Scandinavian Journal of Economics, 96 (1994), 117–23.