 The Dynamics of Inflation and Employment in the Full‐Employment Zone: A Theoretical AnalysisN. F. Laing The Economic Record, 1978, vol. 54, issue 2, 219-228 Abstract: The paper is concerned with an economy in which some sectors reach full employment before others as demand expands. The position of short‐run equilibrium of employment and excess demand is determined by the intersection of the aggregate demand schedule and the short‐run output function, which shows the level of output induced by different levels of aggregate demand. The dynamics of the short‐run equilibrium position are explored. It is shown that equilibrating forces due to relative price changes must predominate over disequilibrating forces due to the redistribution of income, in the absence of exogenous shocks and induced cost inflation. The latter is shown to be subject to a multiplier effect. The paper ends by drawing the policy implications of the analysis. It refutes the acceleration thesis by showing that the level of the real wage does not tend to change under excess demand and argues that if the economy is taken into the full employment zone forces will be set to work which tend to remove the bottlenecks. Date: 1978 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:bla:ecorec:v:54:y:1978:i:2:p:219-228 Ordering information: This journal article can be ordered from Access Statistics for this article The Economic Record is currently edited by Paul Miller, Glenn Otto and Martin Richardson More articles in The Economic Record from The Economic Society of Australia Contact information at EDIRC. |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.