Abstract
The term ‘demand-pull inflation’ originated with the Keynesian macroeconomic model and was used to contrast price increases arising from excess demand with those arising from shocks to aggregate supply. Phillips curve models were initially amended by natural rate models and by models that appended rational expectations and flexible wages and prices to natural rate models. It is now recognized that the response of inflation and unemployment to shifts in aggregate demand itself depends on the inflation environment, and moderate inflation is the desired environment. Stabilization policy continues to distinguish between supply shocks affecting prices and the effects of aggregate demand.
This chapter was originally published in The New Palgrave Dictionary of Economics, 2nd edition, 2008. Edited by Steven N. Durlauf and Lawrence E. Blume
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Perry, G.L. (2008). Demand-Pull Inflation. In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-95121-5_39-2
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DOI: https://doi.org/10.1057/978-1-349-95121-5_39-2
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Latest
Demand-Pull Inflation- Published:
- 27 February 2017
DOI: https://doi.org/10.1057/978-1-349-95121-5_39-2
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Demand-Pull Inflation- Published:
- 03 November 2016
DOI: https://doi.org/10.1057/978-1-349-95121-5_39-1