Inflation and aggregate demand shocks

Research output: Contribution to journalArticle

Abstract

This paper derives and estimates a small general equilibrium model under the assumptions of imperfect competition and translog technology to simulate the impact of shifts in aggregate demand on prices. The simulations suggest that demand expansions are deflationary. This result challenges the common perception that the dynamic aggregate supply schedule is upward sloping.

Original languageEnglish
Pages (from-to)659-666
Number of pages8
JournalJournal of Policy Modeling
Volume17
Issue number6
DOIs
Publication statusPublished - 1 Jan 1995

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