The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Demand-Pull Inflation

  • George L. Perry
Reference work entry


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.


Accelerationist inflation models Aggregate demand Aggregate supply Core inflation Cost-push inflation Demand-pull inflation Excess demand Federal Reserve System Friedman, M. Full employment Incomes policies Inflation Inflation targeting Inflationary expectations Keynesianism Monetary policy Natural rate of unemployment Neo-Keynesian models Organization of Petroleum Exporting Countries Phelps, E. Phillips curve Price control Rational expectations Stabilization policies Sticky prices Sticky wages Tobin, J. Unemployment Volcker, P. Wage-price spiral 

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© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • George L. Perry
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  1. 1.