The Triangular Phillips Curve Model Essay - 2275 Words

The triangular Phillips Curve which was proposed by Gordon (1996) states that the factors cause inflation can be summarized as demand pull, cost push and inflation inertia. Similarly, Gal and Gertler (1999) construct the a kind of hybrid New Keynesian Phillips Curve model and claim that the main factors that affect inflation are the excess aggregate demand, inflation expectation and inflation inertia. In reality, the determinants of inflation are very complex, and the most common four mechanisms of production are stated as follows: 1) Demand pull type. Excessive growth in aggregate demand leads to too much money chasing too few goods. 2) Cost push type. The inflation is caused by the increase in the cost of production and the general level of the price rise. 3)Inflation inertia, that is, once the inflation formed, it will continue for a period of time. 4) Expectation of inflation. Economic activity participants can make a judgment and estimate on the future trend of inflation to get the formation of inflation expectations, which lead to the current increase in the price level. In the paper of Batini et.al. (2005), the theoretical and empirical relationship between the share of labour and inflation in the U.K. was explored, which based on the theory of Cobb–Douglas the New Keynesian Phillips Curve (NKPC). The labour share was examined to be as a useful indicator on measuring the inflationary pressures of the U.K. There was a stable relationship between the informationShow MoreRelatedThe Researches About The Causes Of Inflation Essay2290 Words   |  10 Pages2.3 The researches about the causes of inflation 2.3.1 The theoretical explains of inflation causes The triangular Phillips Curve which was proposed by Gordon (1996) states that the factors cause inflation can be summarized as demand pull, cost push and inflation inertia. Similarly, Gal and Gertler (1999) construct the a kind of hybrid New Keynesian Phillips Curve model and claim that the main factors that affect inflation are the excess aggregate demand, inflation expectation and inflation inertiaRead MoreInflation Is An Important Issue For Both Monetary Policy Makers And The Phillips Curve By John M. Roberts3648 Words   |  15 Pagesarguments that some model of pricing fail to explain the persistence. This paper summarizes two papers: inflation persistence by Jeff Fuhrer and George Moore and New Keynesian Economics and the Phillips Curve by John M. Roberts. We are going to follow the idea of Roberts (1995) and use the model in â€Å"Monetary Theory and Policy† second edition written by Carl E. Walsh. Section 1 gives the reason why inflation persistence is important. And also briefly introduce three different models that are summarizedRead MoreThree Principles Describe How Economy as a Whole Works11284 Words   |  46 Pagesimpact on the market price. 2. Here is an example of a monthly demand schedule for pizza: Price of Pizza Slice $0.00 0.25 0.50 0.75 1.00 1.25 1.50 1.75 2.00 2.25 2.50 Number of Pizza Slices Demanded 10 9 8 7 6 5 4 3 2 1 0 another along the same demand curve. 3. Here is an example of a monthly supply schedule for pizza: Price of Pizza Slice $0.00 0.25 0.50 0.75 1.00 1.25 1.50 1.75 2.00 2.25 2.50 Number of Pizza Slices Supplied 0 100 200 300 400 500 600 700 800 900 1000 Coconuts Gathered Figure 1 2. Crusoe’sRead MoreLenovo and Ibm23938 Words   |  96 Pageslicensing, a firm that enters into a joint venture may risk giving control of its technology or competitive advantage to its partner. Second, the venture does not give a firm the tight control over subsidiaries that it might need to realize experience curve or location economies, nor does the tight control over a foreign subsidiary that it might need for engaging in coordinated global attacks to its rivals. Third, the shared ownership arrangement may lead to conflicts and battles for control between concerned