Since its introduction by Rowthorn (1977), the idea that inflation is always and everywhere a result of conflicting distributional claims has become widely accepted by post-Keynesians. This paper contributes to the literature with a proposed behavioural rule that abstracts from both unemployment and labour participation. While they are both presumed to be causally relevant, the causal chains are captured through a rule in which inflation is driven by the deviation between the growth rate of labour demand and that of the working age population. The proposed behavioural rule can be incorporated into a variety of models. One is proposed for concreteness. In the example model, profit-led behaviour produces a stable equilibrium. In the more empirically supported case of wage-led behaviour, stability is not guaranteed, but becomes more likely under cost share-induced technological change.
Keywords: conflict inflation, post-Keynesian, participation rate, cost share-induced technological change
JEL classification: E11 E12 E31
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