Description
Book SynopsisThis unique book deals with the most serious macroeconomic failure experienced in the US in the post-war period and the great inflation of the late 1960s and 1970s. It is the first detailed analysis, using Federal Reserve documents, of the thinking behind the inflationary monetary policy during this period.
The book examines documentary evidence, including minutes, memos and reports and interviews with people who were closely involved in making policy decisions, to explain the monetary policy that led to this inflation. Thomas Mayer considers forecasting errors and wage and price controls in his attempt to explain why the inflation occurred and places some of the blame on ineffective operating procedures, institutional inefficiencies, and political pressures on the Federal Reserve. The author concludes that much of the responsibility for the mistaken policies lies with academic economists who underestimated the dangers of inflation and encouraged the Federal Reserve to focus on an unattainable employment goal.
Monetary Policy and the Great Inflation in the United States will be welcomed by economists, political scientists and economic historians interested in monetary policy
Trade Review'Thomas Mayer writes beautifully. Although his book treats difficult issues, one can read it with pleasure. He deals with the problem of why inflation soared in the sixties and seventies. At the same time, he offers the reader general insights gained from a lifetime of observation of how 19 members of the Federal Open Market Committee (FOMC) sit around a table and make monetary policy.' -- Robert Hetzel, Journal of Economic Literature
'. . . a fascinating book about the causes of the 1965-79 "Great Inflation" in the US. . . . Recommended for public, academic, and professional collections.' -- R.J. Phillips, Choice
'Mayer has filled a considerable gap in our knowledge with this path-breaking study . . . No one in future should write on this topic without consulting it.' -- David Laidler, Economic Record
'Monetary Policy and the Great Inflation in the United States
is a very enlightening description of how monetary policy led to the Great Inflation. Professor Mayer displays his typically thorough analytical skills and clear writing style while describing a wealth of source level evidence regarding the thought process of monetary policymakers.' -- Stephen J. Perez, EH.NET
'His [Thomas Mayer's] research shows both how easily monetary policy can be led astray by dubious economic theories, and how difficult it is to change direction once a policy has been established . . . This book contains much information and insight about Federal Reserve policy making . . . I recommend it to readers interested in the macroeconomic history of the 1970s or the history of Federal Reserve policy making in general.' -- David C. Wheelock, Journal of Economic History
Table of ContentsContents: 1. Introduction 2. Forecasts of Macroeconomic Variables 3. Controlling the Monetary Aggregates 4. Cognitive Errors 5. Political Pressures 6. Controls and the Committee on Interest and Dividends 7. Economists’ Thinking and the FOMC 8. Conclusion Appendix A: The Federal Open Market Committee Appendix B: Supply Shocks in the 1973–5 Period Appendix C: Background of FOMC Participants Cited References Glossary Index
