PRICE AND PRODUCTIVITY TRENDS IN MANUFACTURING INDUSTRIES.

The article focuses on price and productivity trends in manufacturing industries. The purpose of this paper is to examine one way in which these supply oriented developments manifest themselves the relationship between price trends and productivity trends for one sector of the economy-manufacturing. The relationship between price and productivity trends in manufacturing industries is examined from two different viewpoints, the administration's price-wage guideposts and expected price movements where an industry attempts to maintain a target rate of return on capital. The first has been put forth as a theoretical norm of how prices should behave in areas where market power is present. The second has been found by many observers to be a plausible and useful explanation of price policies in such areas. To what extent has it reflected attempts to maintain target rates of return and under what conditions are supply dominated price policies, as reflected in the target rate model, compatible with price stability are some of the questions. To implement the empirical investigation of these questions, estimates have been made of price and productivity trends in 26 manufacturing industries over the five-year period, 1959-1964 and in 19 manufacturing industries over the preceding five-year period, 1954-1959.