Cost-push inflation
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Aggregate supply – aggregate demand model illustration of aggregate supply (AS) shifting to AS' and causing price level to increase while output shrinks
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Cost-push inflation is a type of inflation caused by substantial increases in the cost of important goods or services where no suitable alternative is available. Higher prices are then the result, as costs of production increases due to a decreased aggregate supply. It stands in contrast to demand-pull inflation. Both accounts of inflation have at various times been put forward with oftentimes inconclusive evidence as to which explanation is superior.​[1] A situation that has been often cited of this was the oil crisis of the 1970s, which some economists see as a major cause of the inflation experienced in the Western world in that decade. It is argued that this inflation resulted from increases in the cost of petroleum imposed by the member states of OPEC. Since petroleum is so important to industrialized economies, a large increase in its price can lead to the increase in the price of most products, raising the price level. Some economists argue that such a change in the price level can raise the inflation rate over longer periods, due to adaptive expectations and the price/wage spiral, so that a supply shock can have persistent effects.[2]
See also​[​edit​]
  1. ^ Samuelson, Paul A.; Solow, Robert M. (1960). "Analytical Aspects of Anti-Inflation Policy". 50 (2): 177–194.
  2. ^ Kenton, Will. "Cost-Push Inflation". Investopedia​. Retrieved 2019-02-25​.
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François QuesnayAdam SmithDavid RicardoThomas Robert MalthusJohann Heinrich von ThünenFriedrich ListHermann Heinrich GossenJules DupuitAntoine Augustin CournotJohn Stuart MillKarl MarxWilliam Stanley JevonsHenry GeorgeLéon WalrasAlfred MarshallGeorg Friedrich KnappFrancis Ysidro EdgeworthVilfredo ParetoFriedrich von WieserJohn Bates ClarkThorstein VeblenJohn R. CommonsIrving FisherWesley Clair MitchellJohn Maynard KeynesJoseph SchumpeterArthur Cecil PigouFrank KnightJohn von NeumannAlvin HansenJacob VinerEdward ChamberlinRagnar FrischHarold HotellingMichał KaleckiOskar R. LangeJacob MarschakGunnar MyrdalAbba P. LernerRoy HarrodPiero SraffaSimon KuznetsJoan RobinsonE. F. SchumacherFriedrich HayekJohn HicksTjalling KoopmansNicholas Georgescu-RoegenWassily LeontiefJohn Kenneth GalbraithHyman MinskyHerbert A. SimonMilton FriedmanPaul SamuelsonKenneth ArrowWilliam BaumolGary BeckerElinor OstromRobert SolowAmartya SenRobert Lucas Jr.Joseph StiglitzRichard ThalerPaul KrugmanThomas Pikettymore
Categories​: Inflation
This page was last edited on 19 May 2020, at 10:22 (UTC).
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