BPEA | 1979 No. 1

Growth and Inflation: Analysis by Industry

1979, No. 1

THE BELIEF that prices are determined primarily by demandf actors (at least in the short run) continues to dominate the thinking on inflation, even by those who reject most of neo-Keynesian macroeconomics. The widespread conviction that only a slowdown in economic activity will mitigate price increases implicitly accepts the concept of a Phillips curve despite its failing econometrics upport. While some supply shifts, particularly in energy, have been generally recognized, they are usually awarded no more than incidental importance. The aim of this paper is to assess the relative importance of demand factors and supply factors on a disaggregated level, specifically the two digit industry level for the entire U.S. economy