The Interaction Between Multiplier and Inflation Processes

Claes-Henric Siven
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Claes-Henric Siven: University of Stockholm

A chapter in Topics in Disequilibrium Economics, 1978, pp 93-113 from Palgrave Macmillan

Abstract: Abstract The Barro-Grossman theory of the demand and the supply multiplier is generalized in the following ways: Household behavior under disequilibrium is derived from the knowledge of the behavior under equilibrium using the Tobin-Houthakker theory of rationing. The setting of prices and wages under equilibrium and disequilibrium conditions is analyzed. It is shown that the value of the demand multiplier depends on whether employment is instantaneously adjusted during a depression. The results of the microeconomic analysis are used for constructing a macroeconomic model where the interactions between inflation and quantitative adjustments are studied.

Keywords: Wage Rate; Behavior Equation; General Equilibrium; Phillips Curve; Price Inflation (search for similar items in EconPapers)
Date: 1978
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-1-349-03917-3_6

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DOI: 10.1007/978-1-349-03917-3_6

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