Home > Working Papers

Working Paper 2009-015A

"The Great Inflation in the United States and the United Kingdom: Reconciling Policy Decisions and Data Outcomes"
by Riccardo DiCecio, and Edward Nelson

We argue that the Great Inflation experienced by both the United Kingdom and the United States in the 1970s has an explanation valid for both countries. The explanation does not appeal to common shocks or to exchange rate linkages, but to the common doctrine underlying the systematic monetary policy choices in each country. The nonmonetary approach to inflation control that was already influential in the United Kingdom came to be adopted by the United States during the 1970s. We document our position by examining official policymaking doctrine in the United Kingdom and the United States in the 1970s, and by considering results from a structural macroeconomic model estimated using U.K. data.

Full Text - Acrobat PDF (216k)

Notify Me of Updates for:
Category > Monetary Policy/Macroeconomics
Author > Riccardo DiCecio
Author > Edward Nelson
Research Papers and Publications: JEL Code > E31
Research Papers and Publications: JEL Code > E52
Research Papers and Publications: JEL Code > E58