Economic Policy and the Great Stagflation discusses the national economic policy and economics as a policy-oriented science. This book summarizes what economists do and do not know about the inflation and recession that affected the U.S. economy during the years of the Great Stagflation in the mid-1970s. The topics discussed include the basic concepts of stagflation, turbulent economic history of 1971-1976, anatomy of the great recession and inflation, and legacy of the Great Stagflation. The relation of wage-price controls, fiscal policy, and monetary policy to the Great Stagflation is also elaborated. This publication is beneficial to economists and students researching on the history of the Great Stagflation and policy errors of the 1970s.

Preface1 Introduction 1. Historical Perspective 2. Preview of Things to Come2 Understanding Stagflation: Some Basic Concepts 1. Aggregate Supply and Demand Analysis 2. Explanations for Stagflation 3. The Trade-off between Inflation and Unemployment 4. An Eclectic Word on Monistic Monetarism 5. Summary3 The Turbulent Economic History of 1971-1976 1. The New Economic Policy: Wage-Price Controls 2. The New Economic Policy: Devaluing the Dollar 3. Monetary and Fiscal Actions: A Destabilization Policy for 1972-1973 4. The Origins of Stagflation, 1973-1974 5. Recession and Recovery, 1975-1976 6. Summary4 The Anatomy of the Great Recession 1. The Interplay of Inventories and Final Sales 2. Dynamics of the Recession 3. The Predictability of the Recession 4. The Harried Consumer 5. The Worried Investor 6. Loose Ends 7. The Great Productivity Puzzle 8. Summary5 The Anatomy of the Great Inflation 1. The Inflationary Bulge of 1973-1974 2. Energy Prices: The High Cost of Heating 3. Food Prices: The High Cost of Eating 4. Conclusion: The Effects of the Oil and Food Shocks 5. A Closer Look at Non-Food Non-Energy Prices 6. Prices of Automobiles 7. Prices of Nondurable Goods 8. Summary and Conclusions Appendix6 Wage-Price Controls and the Great Stagflation 1. A Capsule History of the 1971-1974 Controls 2. Public Opinion on Controls 3. The Economic Effects of Controls 4. Previous Research on the 1971-1974 Controls 5. A New Method and a New Model 6. Empirical Results 7. Controls and the Inflationary Bulge 8. Controls and Real Economic Activity 9. Summary Appendix-The Model of Wage-Price Controls7 Fiscal Policy and the Great Stagflation 1. The Pre-Election Stimulation of the Economy 2. The Post-Election Switch to Restrictive Policy 3. Inflation and Fiscal Drag in 1974 4. Concern with Recession and the 1975 Tax Cut 5. Fiscal Policy in the Early Recovery Period 6. The Effectiveness of the 1975-1976 Tax Reductions 7. Summary Appendix-A Model of Temporary Tax Changes8 Monetary Policy and the Great Stagflation 1. Loosening the Monetary Reins in 1972 2. The Turn toward Restraint in 1973 3. Monetary Policy during the Downswing, 1974:1-1975:1 4. Monetary Policy for the Recovery, 1975:2-1976:4 5. Summary9 The Legacy of the Great Stagflation 1. Three Histories of 1971-1976 2. Learning from Our Mistakes 3. Some Remarks on 1977-1979 4. In ConclusionReferencesIndex