This paper compares inflation behavior across widely separated time periods (extending back into the nineteenth century) and among a number of countries in an effort to shed some light on two questions: (i) To what extent do the similarities and differences in inflation behavior conform to or depart from the predictions of competing theoretical explanations with respect to such behavior? (ii) Is the short- and intermediate-run behavior of prices and wages in the United States more inflexible than in other advanced economies? The countries examined were the United States, Germany, the United Kingdom, Italy, and Sweden. Some of the major results and their implications are first summarized below. The evidence is then presented.

The long-run and short-run dynamics of the supply of national output are a key to macro-economic behavior. These dynamics form the basis of the natural rate analysis of Milton Friedman and others. And the kev to the dynamics of the total supply is that of the labor supply. It would be an exaggeration to claim that capital supply and the behavior of firms is irrelevant to macroeconomics. But output can be viewed as the product of a cyclical employment variable with a more or less uniformly increasing productivity. Thus it is clear that the properties of the total supply are highly dependent upon those of the labor supply. The purpose of this paper is to explore the dynamics of the labor supply, with particular emphasis on the effect of expectations models. In the process a regression that Robert Lucas and Leonard Rapping used to explain the labor supply is replicated with more recent data. Although further analysis is done, one of the purposes of this study was to verify that their earlier 1930-65 results also hold for a more recent period (1950-70), and with improved data series.