Origins of the Great Inflation

By Allan H Meltzer. 2005

147 citations recorded by the source corpus.

The Great Inflation from 1965 to 1984 is the climactic monetary event of the last part of the 20th century. This paper analyzes why it started and why it continued for many years. Like others, it attributes the start of inflation to analytic errors, particularly the widespread acceptance of the simple Keynesian model with its implication that monetary and fiscal policy should be coordinated. In practice, that meant that the Federal Reserve financed a large part of the fiscal deficit. This paper gives a large role to political decisionmaking. Continuation of inflation depended on political choices, analytic errors, and the entrenched belief that inflation would continue.

Subfields: Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/f71c398c90499f807380d35611562ac2b7aa4f62

Citations in the corpus

• Causal Change Detection in Possibly Integrated Systems: Revisiting the Money–Income Relationship* (2019, unknown): “The Great Inflation which began in 1965 and ended around 1984 has been labelled as one of the Federal Reserve’s biggest policy failures (Meltzer, 2005; Humpage and Mukerjee, 2015).”