IDEAS home Printed from https://ideas.repec.org/a/bla/ecorec/v54y1978i2p219-228.html
   My bibliography  Save this article

The Dynamics of Inflation and Employment in the Full‐Employment Zone: A Theoretical Analysis

Author

Listed:
  • N. F. LAING

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.

Suggested Citation

  • N. F. Laing, 1978. "The Dynamics of Inflation and Employment in the Full‐Employment Zone: A Theoretical Analysis," The Economic Record, The Economic Society of Australia, vol. 54(2), pages 219-228, August.
    • Handle: RePEc:bla:ecorec:v:54:y:1978:i:2:p:219-228
    DOI: 10.1111/j.1475-4932.1978.tb00331.x
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/j.1475-4932.1978.tb00331.x
    Download Restriction: no
    File URL: https://libkey.io/10.1111/j.1475-4932.1978.tb00331.x?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. N. F. Laing, 1973. "A Theory of Employment Fluctuations in the Full Employment Zone," The Economic Record, The Economic Society of Australia, vol. 49(4), pages 546-559, December.
    2. Laing, N F, 1973. "A Theory of Employment Fluctuations in the Full Employment Zone," The Economic Record, The Economic Society of Australia, vol. 49(128), pages 546-559, December.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.

      More about this item

      Statistics

      Access and download statistics

      Corrections

      All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:ecorec:v:54:y:1978:i:2:p:219-228. See general information about how to correct material in RePEc.

      If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

      If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

      If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

      For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/esausea.html .

      Please note that corrections may take a couple of weeks to filter through the various RePEc services.

      IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.