Robert Shiller: Well it's hard, this is cost-push inflation, it's not demand-pull.
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You know, the labor market is strong, but so far that has not shown any indication of cost push pressure.
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The types of inflation episodes that have been important in the U.S. have almost always come on the cost side, what we call Cost-Push Inflation.
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"Factors which have often driven inflation higher pertain to cost-push price pressures, for example in higher administered prices," said Colen Garrow, economist at Lefika Securities.
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"A Trump presidency would no doubt hurt Asia's gross domestic product (GDP) growth and could ultimately drive cost-push inflation, impart smaller trade surpluses and looser macroeconomic policies," Nomura said.
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The BOJ's "cost-push" indicator, published in a central bank report, measured around 0.4 percent in August, according to the central bank's latest outlook report on the economy and prices.
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Imposing tariffs on imported goods sets off a classic kind of cost-push inflation in which the inputs of a good, such as parts, materials and labor, rise in price and prompt rising prices.
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"In the long run, the labor shortages could cause cost-push inflation or stagflation, in which the cost of doing business keeps on rising, while the economy stagnates," said Masaki Kuwahara, senior economist at Nomura Securities.
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"Growth has been supported by the continued strength of household consumption, underpinned, in turn, by a thriving labor market ... There is no sign that cost-push pressures are putting excessive upward force on price inflation," Clarida said.
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The possible hardening of inflation due to fiscal slippages and a turn in the commodity cycle, which may result in a cost-push pressure on prices, had a bearing on the RBI's decision to keep the rate constant.
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"This is generally a cost-push inflation in the possible range of 1 percent or slightly above...There is not much room to pressure the economy through trade sanctions and the effect will be limited," he said, noting that there was little cross-border trade between Gulf Arab countries.
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"The markets are changing their valuation, if you will, for an economy that will be growing now at full employment and will now start to suffer from cost-push pressures — wage and interest rate both labor and capital cost increases — and probably inflation that's 3 percent or more," Paulsen, chief investment strategist at The Leuthold Group, told CNBC's "Closing Bell, " shortly after the end of trading.
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In macroeconomics, the triangle model employed by new Keynesian economics is a model of inflation derived from the Phillips Curve and given its name by Robert J. Gordon. The model views inflation as having three root causes: built-in inflation, demand-pull inflation, and cost-push inflation.Robert J. Gordon (1988), Macroeconomics: Theory and Policy, 2nd ed., Chap.
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Cost-push versus Demand-pull Inflation: Some Empirical Evidence. Journal of money, credit & banking (Ohio State University Press),7(3), 391. More accurately, it should be described as involving "too much money spent chasing too few goods," since only money that is spent on goods and services can cause inflation. This would not be expected to happen, unless the economy is already at a full employment level.
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And furthermore: > Laughlin's attack on the quantity theory had much in common with recent > cost-push or structural or supply-shock theories of inflation, in > emphasizing the role of factors affecting specific goods and services rather > than general monetary influences. Then, as now, such theories ran against > the major stream of monetary analysis as exemplified in Laughlin's time by > the work of Irving Fisher. As a result, his writings on theory have had no > lasting influence on economic thought.
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Changes in the non-price level factors or determinants cause changes in aggregate demand and shifts of the entire aggregate demand (AD) curve. When demand for goods exceeds supply there is an inflationary gap where demand-pull inflation occurs and the AD curve shifts upward to a higher price level. When the economy faces higher costs, cost-push inflation occurs and the AS curve shifts upward to higher price levels. The AS–AD diagram is also widely used as a pedagogical tool to model the effects of various macroeconomic policies.
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Large cyclical changes in cash receipts (in white) and payments (in black) reflect changes in the government's economic objectives. In comparison with similar economies,Key indicators of economic activity in Australia, such as cost-push inflation and manufacturing and retailing sector productivity, are usually compared with other Organisation for Economic Co-operation and Development member countries. Australia's government spending is relatively low. For the twenty-year period from 1960 to 1980, the growth in spending roughly matched percentages in the much higher populated nations of Japan and the United States.
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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 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.
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Robert J. Gordon of Northwestern University has analyzed the Phillips curve to produce what he calls the triangle model, in which the actual inflation rate is determined by the sum of #demand pull or short-term Phillips curve inflation, #cost push or supply shocks, and #built- in inflation. The last reflects inflationary expectations and the price/wage spiral. Supply shocks and changes in built-in inflation are the main factors shifting the short-run Phillips curve and changing the trade-off. In this theory, it is not only inflationary expectations that can cause stagflation.
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