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

Author

Listed:
  • Diana Viorica Lupu

    (Petre Andrei University of Iasi, Faculty of Economics)

  • Irina Liliana Rotundu

    (Petre Andrei University of Iasi, Faculty of Economics)

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.

Suggested Citation

  • Diana Viorica Lupu & Irina Liliana Rotundu, 2012. "The Great Inflation of the '70s and Keynesian Economic Model," Ovidius University Annals, Economic Sciences Series, Ovidius University of Constantza, Faculty of Economic Sciences, vol. 0(1), pages 586-591, May.
    • Handle: RePEc:ovi:oviste:v:xii:y:2012:i:12:p:586-591
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    More about this item

    Keywords

    Keynesian doctrine; money policy; hyperinflation;
    All these keywords.

    JEL classification:

    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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