Inflation is sometimes identified as being demand-pull and sometimes as cost-push indicating the source of the inflationary pressures. Demand-pull inflation describes an increase in the average price level initiated by excessive aggregate demand. Cost-push describes an increase in the average price level initiated by excessive increases in the costs of production.
Look at the data for inflation, the growth rate of real GDP, the unemployment rate (all available at http://research.stlouisfed.org/fred2/ )and the employment cost index (http://bls.gov/ncs/ect/home.htm ) for the periods 1979-1982, 1995-1999, and for the last 4 years. Be sure that you understand the definition of each variable you use. Analyze for these three periods and graphically show what you think is happening in the macroeconomy.
A comparison with the Canadian experience can be done by looking at comparable Canadian data from http://strategis.ic.gc.ca/sc_ecnmy/sio/homepage.html . At this data site, you can also use cost of production which is more general than simply the employment cost index.
Is the inflation of the last four years demand-pull or cost push?
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