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 inflationunemployment 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 shortrun 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 with a graphical analysis the implications of aggregate demand elasticity for the Phillips curve.
suggested citation:
Ben L. Kyer and Gary E. Maggs. "Implications Of Aggregate Demand Elasticity For The Phillips Curve." New York Economic Review. vol. 35, Fall 2004, p. 6976
BibTeX entry download
