Inflation and the Growth Rate of Output
This paper shows that inflation has depended strongly on the growth rate of output for most of the twentieth century. Only in recent years has the deviation of output from trend become the predominant determinant of price behavior. The paper also shows that the growth rate effect works primarily through materials prices, and that the declining importance of materials can explain why the growth rate effect has weakened over time. Finally, the paper shows that the growth rate effect can explain why prices rose in the mid- and late- 1930s despite the fact that output was substantially below trend.
|Date of creation:||May 1996|
|Date of revision:|
|Publication status:||published as (Published as "Why Did Prices Rise in the 1930's") Journal of Economic History, Vol. 59 (March 1999): 167-199.|
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- Gordon, Robert J, 1990. "What Is New-Keynesian Economics?," Journal of Economic Literature, American Economic Association, vol. 28(3), pages 1115-71, September.
- Robert E. Hall & N. Gregory Mankiw, 1993.
"Nominal Income Targeting,"
NBER Working Papers
4439, National Bureau of Economic Research, Inc.
- Hall, R.E. & Mankiw, N.G., 1993. "Nominal Income Targeting," Harvard Institute of Economic Research Working Papers 1650, Harvard - Institute of Economic Research.
- Robert J. Gordon & James A. Wilcox, 1978. "Monetarist Interpretations of the Great Depression: An Evaluation and Critique," NBER Working Papers 0300, National Bureau of Economic Research, Inc.
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