1978 | OriginalPaper | Buchkapitel
The Interaction Between Multiplier and Inflation Processes
verfasst von : Claes-Henric Siven
Erschienen in: Topics in Disequilibrium Economics
Verlag: Palgrave Macmillan UK
Enthalten in: Professional Book Archive
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The Barro-Grossman theory of the demand and the supply multiplier is generalized in the following ways: Household behavior under disequilibrium is derived from the knowledge of the behavior under equilibrium using the Tobin-Houthakker theory of rationing. The setting of prices and wages under equilibrium and disequilibrium conditions is analyzed. It is shown that the value of the demand multiplier depends on whether employment is instantaneously adjusted during a depression. The results of the microeconomic analysis are used for constructing a macroeconomic model where the interactions between inflation and quantitative adjustments are studied.