publication . Article . 2004

Implications Of Aggregate Demand Elasticity For The Phillips Curve

Ben L. Kyer; Gary E. Maggs;
Open Access
  • Published: 01 Jan 2004 Journal: New York Economic Review, volume 35, issue 1, pages 69-76
While the general relationship between the aggregate supply curve and the Phillips curve is recognized, the importance of aggregate demand and, in particular, aggregate demand elasticity, for the inflation-unemployment relationship has been untreated. We believe, however, that the elasticity of aggregate demand with respect to the general price level does have some significance for the short-run Phillips curve since, on a general level, the economy's equilibrium price level, inflation rate, real gross domestic product, and unemployment rate are determined jointly by aggregate supply and aggregate demand. The primary purpose of this paper then is to demonstrate w...

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