A structuralist inflation curve

Abstract

This paper presents a structuralist model of inflation and applies it to the US economy. The model uses a mark-up rule to specify inflation as a function of income distribution and capacity utilization, as usual in structuralist macroeconomics, but it also includes inflation expectations, the government's inflation target and cost pressures from non-labor inputs as explaining variables. The model shows how inflation and income distribution, measured by the wage share of income, are connected through an inflation curve in the long run.