Macroeconomic susceptibility, inflation, and aggregate supply

Raymond J. Hawkins

Physica A: Statistical Mechanics and its Applications, 2017, vol. 469, issue C, 15-22

Abstract: We unify aggregate-supply dynamics as a time-dependent susceptibility-mediated relationship between inflation and aggregate economic output. In addition to representing well various observations of inflation–output dynamics this parsimonious formalism provides a straightforward derivation of popular representations of aggregate-supply dynamics and a natural basis for economic-agent expectations as an element of inflation formation. Our formalism also illuminates questions of causality and time-correlation that challenge central banks for whom aggregate-supply dynamics is a key constraint in their goal of achieving macroeconomic stability.

Keywords: Macroeconomic stability; Monetary policy; Inflation; Susceptibility; Econophysics (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:phsmap:v:469:y:2017:i:c:p:15-22

DOI: 10.1016/j.physa.2016.10.075

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