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The great inflation in the United States and the United Kingdom: reconciling policy decisions and data outcomes

Riccardo DiCecio and Edward Nelson

No 2009-015, Working Papers from Federal Reserve Bank of St. Louis

Abstract: 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.

Keywords: Inflation (Finance); Great Britain (search for similar items in EconPapers)
Date: 2009
New Economics Papers: this item is included in nep-cba, nep-mac and nep-mon
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Citations: View citations in EconPapers (14)

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Chapter: The Great Inflation in the United States and the United Kingdom: Reconciling Policy Decisions and Data Outcomes (2013) Downloads
Working Paper: The Great Inflation in the United States and the United Kingdom: Reconciling Policy Decisions and Data Outcomes (2009) Downloads
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