Sunday, June 27, 2021

Persistent Demand-Pull Inflation is Unlikely in Demand-Led Economies — Peter Cooper

Capitalist economies are demand led in the sense that both output and growth tend to reflect the behavior of autonomous demand, especially in the long run. Prices, in contrast, tend to be supply determined, reflecting cost. Supply shocks can temporarily dominate demand effects on output (for instance, as the result of war, a pandemic, or an oil shock), just as variations in demand, especially if supply is constricted, can temporarily dominate cost effects on prices. But the normal situation for a capitalist economy is demand-determined output and supply-determined prices....
heteconomist
Persistent Demand-Pull Inflation is Unlikely in Demand-Led Economies
Peter Cooper

No comments: