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The first inflation problem of the twenty-first century

Author

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  • Brad DeLong

Abstract

Inflation in the US after World War II peaked at 19.7 per cent in the 12 months to March 1947. The US economy reoriented itself from its wartime to its post-war structural configuration. The Federal Reserve did nothing at all. Inflation went negative in 1949 at the onset of a minor recession. Inflation revived in 1951, and was in some ways a reverse of 1947 – not a demobilization but a remobilization inflation. Again, the Federal Reserve did nothing. And, again, the inflation wave passed. Then came the long siege of moderate inflation that took place between 1966 and 1980, as the Federal Reserve dithered before the Volcker disinflation. What policy you think would have been and will be appropriate for the Biden Administration and the Yellen–Powell Fed depends on which of these past historical episodes provides the best model and analogy for the state of the US economy today. The odds right now seem to me to be on the first two, rather than the third.

Suggested Citation

  • Brad DeLong, 2023. "The first inflation problem of the twenty-first century," Review of Keynesian Economics, Edward Elgar Publishing, vol. 11(2), pages 117-128, April.
    • Handle: RePEc:elg:rokejn:v:11:y:2023:i:2:p117-128
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    File URL: https://www.elgaronline.com/view/journals/roke/11/2/article-p117.xml
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    Citations

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    Cited by:

    1. Nell, Kevin, 2023. "Inflation and growth in developing economies: A tribute to Professor Thirlwall," MPRA Paper 118757, University Library of Munich, Germany, revised 01 Sep 2023.
    2. Heike Joebges & Camille Logeay, 2024. "Profits too high? Assessing inflation in the eurozone using wage and price rules for profit and unit labor costs based on national accounts data," FMM Working Paper 107-2024, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    3. Pianta, Mario, 2023. "Inflation and distributive conflicts," MPRA Paper 119345, University Library of Munich, Germany.

    More about this item

    Keywords

    inflation; monetary economics; monetary history;
    All these keywords.

    JEL classification:

    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
    • E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • N1 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations

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