Abstract:
In this paper, we assess the relationship between income distribution and price dynamics, focusing on the role of distributive conflict between labor and capital in the U.S. economy over the period 1960-2023. We employ a spectral decomposition in both the frequency and time-frequency domains to document how different distributive-inflation configurations have coexisted and shifted over these six decades. We complement the empirical analysis with a tractable nonlinear disequilibrium model in which inflation emerges endogenously from evolving wage-price and profit-price spirals. Structural parameters act as bifurcation triggers, determining whether inflationary pressures are wage-led or profit-led. By isolating the conflict channels and their dynamic feedback, we highlight how shifts in bargaining power and markup claims can sustain persistent inflationary regimes, with implications for policies addressing the structural roots of inflation.
