Cost-Push Inflation: Causes, Effects, and Policy Responses

Peter Jordan explains cost-push inflation, caused by rising costs of inputs like commodities and wages. He discusses its impact on aggregate supply, leading to a negative output gap. The video contrasts cost-push with demand-pull inflation and explores market corrections and fiscal stimulus risks. Historical examples highlight the dangers of uncontrolled inflation.

How does cost-push inflation differ from demand-pull inflation?

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What are the potential consequences of trying to correct cost-push inflation with fiscal stimulus?

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Discuss the cyclical nature of cost-push inflation and its effects on wage negotiations.

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