Price mark-ups over labour costs have remained relatively constant

Real wages increase with technical progress resulting in a reduction in labour demand so the product of real wages and employment remains constant.

The battle of the mark-up ensures that the change in nominal wages equals inflation

Technical progress has continuously generated higher incomes

Real unit labour costs

Nominal unit labour costs

Total factor productivit

Labour share of total income

the underlying rate of inflation to accelerate because the actual inflation rate exceeds the underlying rate of inflation.

.prices will decline because there is an excess supply of goods (neoclassical assumption).

output to decline because there is an excess supply of goods (Keynesian assumption).

consumer spending to decline because goods are more expensive

inflation is everywhere and always a monetary phenomenon

big inflations will be stopped by big recession

money illusion is the source of the unemployment in the long-run

demand policies cannot move the actual unemployment rate permanently away from its equilibrium level

The economy is dichotomized in the short-run because of the Taylor rule

Wage-negotiations are subject to money illusion so that real wages would fall to an unsustainable level

Even if we could reduce unemployment to 0% today at a cost of an increase in inflation of 5%, there is no guarantee that underlying inflation in the economy would remain unchanged

The battle of the mark-ups determines wages and prices only so long as there is no supply shock