The Great Inflation of the '70s and Keynesian Economic Model

Diana Viorica Lupu () and Irina Liliana Rotundu
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Diana Viorica Lupu: Petre Andrei University of Iasi, Faculty of Economics
Irina Liliana Rotundu: Petre Andrei University of Iasi, Faculty of Economics

Ovidius University Annals, Economic Sciences Series, 2012, vol. XII, issue 1, 586-591

Abstract: The great inflation of the 70s, triggered after two decades of stability and growth was explained as known, by the representatives of neo-liberal economic theory as due to the erroneous feature of state interventionism policies inspired by Keynesian doctrine, which have been mainly applied throughout this period. In particular, the regulatory activity of the financial monetary system and the cheap money policy have been accused, being regarded as obstacles to the market and its mechanisms of self-regulation. Our exposé supports, conversely, that the hyperinflation of the 1970s, followed by economic stagnation and rising unemployment do not refute the theory developed by Keynes, but provides new arguments in its favor. Because, what was implemented was inspired either from a distorted view of it, or out of mainly political reasons, hence the proven inconsistency in applying the Keynesian economic model.

Keywords: Keynesian doctrine; money policy; hyperinflation (search for similar items in EconPapers)
JEL-codes: E12 E31 E52 (search for similar items in EconPapers)
Date: 2012
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