Inflation and the Growth Rate of Output

Christina Duckworth Romer

No 5575, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper shows that inflation has depended strongly on the growth rate of output for most of the twentieth century. Only in recent years has the deviation of output from trend become the predominant determinant of price behavior. The paper also shows that the growth rate effect works primarily through materials prices, and that the declining importance of materials can explain why the growth rate effect has weakened over time. Finally, the paper shows that the growth rate effect can explain why prices rose in the mid- and late- 1930s despite the fact that output was substantially below trend.

JEL-codes: E31 (search for similar items in EconPapers)
Date: 1996-05
Note: EFG ME
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