‘Stagflation’: A Condition Created by Accelerated Demand Pull Inflation (Comment)

Leonard W. Martin

American Journal of Economics and Sociology, 1985, vol. 44, issue 4, 497-502

Abstract: Abstract. F. B. MacFarland's unorthodox model of oligopolistic‐price leadership‐pricing as a trigger of inflationary recession and so stagflation is disputed. His claim is challenged that auto companies respond to a leftwardshifting demand curve by raising price as a maximizing application of markup pricing notwithstanding the numerous theorists' writings presumably combined in “a partial explanation of stagflation,”Chrysler left the General Motors' umbrella in 1973 and individual auto models were obviously priced consistently with the Robinsonian algorithm in 1974, Oligopoly as a source of cost‐push inflation or stagflation is acceptable only if oligopoly is growing; but between 1958 and 1980 effective competition grew in the U.S. economy. Stagflation results from repeated accelerations of demand‐pull inflation to reduce unemployment below its natural rate as the Phillips curve shifts rightward.

Date: 1985
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