Inflation and Macroeconomics in the US during the Golden Age

Journal title HISTORY OF ECONOMIC THOUGHT AND POLICY
Author/s Guilherme Spinato Morlin
Publishing Year 2021 Issue 2021/1
Language English Pages 24 P. 107-130 File size 266 KB
DOI 10.3280/SPE2021-001005
DOI is like a bar code for intellectual property: to have more infomation click here

Below, you can see the article first page

If you want to buy this article in PDF format, you can do it, following the instructions to buy download credits

Article preview

FrancoAngeli is member of Publishers International Linking Association, Inc (PILA), a not-for-profit association which run the CrossRef service enabling links to and from online scholarly content.

This paper reviews interpretations of the moderate inflation observed in the US during the 1950s and early 1960s. In this period, moderate and persistent inflation disconcerted economists and challenged policymakers. The opposition between demand-pull and cost-push views stimulated different interpretations, as sectorial demand-shift inflation theory and the modified Phillips curve. As policy targeted growth and employment, incomes policy was applied to contain inflation. The pa-per provides an overview of explanations to the moderate inflationary process in light of the historical events of the Golden Age of capitalism.

Keywords: creeping inflation, cost-push inflation, incomes policy, Phillips curve, wage-price spiral

Jel codes: B22, E31, N12

  1. Ackley G. (1959). Administered prices and the inflationary process, The American Economic Review, 49(2): 419-430.
  2. Bach G. (1949). Monetary-Fiscal Policy Reconsidered, Journal of Political Economy, 57: 303-94. DOI: 10.1086/256863
  3. Bach G. L. and A. Ando (1957). The redistributional effects of inflation, The Review of Economics and Statistics, 1-13. DOI: 10.2307/1926215
  4. Bartels A. H. (1983). The Office of Price Administration and the legacy of the New Deal, 1939-1946, The Public Historian, 5(3), 5-29. DOI: 10.2307/3377026
  5. Blanchard O. (2016). The Phillips Curve: Back to the’60s?, The American Economic Review, 106(5): 31-34.
  6. Blinder A. S. (1988). The fall and rise of Keynesian economics, Economic record, 64(4): 278-294.
  7. Bronfenbrenner M. and Holzman F. D. (1963). Survey of inflation theory, The American economic review, 53(4): 593-661. DOI: 10.1007/978-1-349-00278-8_2
  8. Buehler A. G. (1959). The problem of inflation, The ANNALS of the American Academy of Political and Social Science, 326(1): 1-10. DOI: 10.1177/000271625932600101
  9. Cartter A. M. (1959). Theory of Wages and Employment, Homewood, Irwin Series in Economics.
  10. Cavalieri T., P. Garegnani and M. Lucii (2004). Anatomia di una sconfitta, La Rivista Del Manifesto, 48: 44-50.
  11. Collins R. M. (2002). More: The politics of economic growth in postwar America, Oxford, Oxford University Press.
  12. Dunlop J. (1957). The theory of wage determination, London, Palgrave Macmillan.
  13. Eatwell J., J. Llewellyn and R. Tarling (1974). Money wage inflation in industrial countries, The Review of Economic Studies, 41(4): 515-523. DOI: 10.2307/2296701
  14. Eckstein O. and G. Fromm (1959). Steel and the postwar inflation, Washington, US Government Printing Office.
  15. Edgren G.; K. O. Faxén, and C. E. Odhner (1973). Wage formation and the economy, London, Allen & Unwin.
  16. Fisher I. (1926). A statistical relation between unemployment and price changes. Internationall Labour Review, 13(6): 785-792.
  17. Forder J. (2014). Macroeconomics and the Phillips curve myth, Oxford, Oxford University Press.
  18. Friedman M. (1951). Some comments on the significance of labor unions for economic policy. In Wright, D. M. (1951). The impact of the union. Eight Economic Theorists Evaluate the Labor Union Movement: 204-34, San Diego, Harcourt, Brace and Company.
  19. Glyn A., A. Hughes, A. Lipietz and A. Singh (1990). The rise and fall of the golden age. In Marglin S. A., and Schor J. B. (eds.) (1990). The golden age of capitalism: reinterpreting the postwar experience, 39-125, Oxford, Oxford University Press.
  20. Gordon R. J. (2018). Friedman and Phelps on the Phillips curve viewed from a half century’s perspective, Review of Keynesian Economics, 6(4): 425-436.
  21. Headey B. W. (1970). Trade unions and national wages policies, The Journal of Politics, 32(2): 407-439. DOI: 10.2307/2128660
  22. Holzman F. D. (1959). Creeping Inflation, The Review of Economics and Statistics, 41(3): 324-329. DOI: 10.2307/1927465
  23. Kaldor N. (1976). Inflation and recession in the world economy, The Economic Journal, 86(344): 703-714. DOI: 10.2307/2231447
  24. Kalecki M. (1943). Political Aspects of Full Employment, The Political Quarterly, 14(4): 322-330.
  25. Keynes J. M. ([1936]2018). The general theory of employment, interest, and money, Cambridge, Palgrave Macmillan.
  26. Korpi W. (2002). The great trough in unemployment: a long-term view of unemployment, inflation, strikes, and the profit/wage ratio, Politics & Society, 30(3): 365-426. DOI: 10.1177/0032329202030003002
  27. Kristal T. (2010). Good times, bad times: Postwar labor’s share of national income in capitalist democracies, American Sociological Review, 75(5): 729-763. DOI: 10.1177/0003122410382640
  28. Lavoie M. (2014). Post-Keynesian economics: new foundations, Cheltenham, Edward Elgar Publishing.
  29. Lerner A. P. (1949). Some Theoretical Aspects, The Review of Economics and Statistics, 31(3): 193-200. DOI: 10.2307/1927742
  30. Lerner A. P. (1951). Economics of employment, New York, McGraw-Hill Book Company.
  31. Machlup F. (1960). Another view of cost-push and demand-pull inflation, The Review of Economics and Statistics, 42(2): 125-139. DOI: 10.2307/1926532
  32. Marget A. W. (1960). Inflation: Some lessons of recent foreign experience, The American Economic Review, 50(2): 205-211.
  33. Marglin S. A. (1990). Lessons of the golden age: an overview. In Marglin, S. A., and Schor, J. B. (eds.) (1990). The golden age of capitalism: reinterpreting the postwar experience, 1-38, Oxford, Oxford University Press.
  34. Martin A. (1985). Wages, profits, and investment in Sweden. In Lindberg, L. and Maier, C. (eds.) (1985). The Politics of Inflation and Economic Stagnation, 403-466, Washington, The Brookings Institution.
  35. Meany G. (1959). What Would Labor Do About Inflation?, The Annals of the American Academy of Political and Social Science, 326(1): 32-39. DOI: 10.1177/000271625932600105
  36. Milner S. (2019). Assuming Direct Control: The Beguiling Allure of Incomes Policies in Postwar America, Journal of Policy History, 31(1): 42-71.
  37. Minsky H. P. (1961). Employment, growth and price levels: A review article, The Review of Economics and Statistics, 43(1): 1-12. DOI: 10.2307/1926827
  38. Morton W. A. (1950). Trade Unionism, Full Employment and Inflation, The American Economic Review, 40(1): 13-39.
  39. Morton W. A. (1951). Keynesianism and inflation, Journal of Political Economy, 59(3): 258-265. DOI: 10.1086/257080
  40. Nordhaus W. D. (1972). The worldwide wage explosion, Brookings Papers on Economic Activity, 1972(2): 431-465. DOI: 10.2307/2534184
  41. Phillips A. W. (1958). The relation between unemployment and the rate of change of money wage rates in the United Kingdom, 1861-1957, Economica, 25(100): 283-299. DOI: 10.2307/2550759
  42. Rees A. (1959). Do unions cause inflation?, The Journal of Law and Economics, 2: 84-94. DOI: 10.1086/466552
  43. Reynolds L. G. (1957). The impact of collective bargaining on the wage structure in the United States. In Dunlop, J. The theory of wage determination, 194-221, Palgrave Macmillan, London.
  44. Robinson R. (1960). Employment, Growth, and Price Levels: The Joint Economic Committee Report, The American Economic Review, 50(5): 996-1010.
  45. Rowthorn R. E. (1977). Conflict, inflation and money, Cambridge Journal of Economics, 1(3): 215-239.
  46. Rubin B. A. (1986). Class struggle American style: Unions, strikes and wages, American Sociological Review, 51(5): 618-633. DOI: 10.2307/2095488
  47. Samuelson P. A. (1948). Economics: An introductory analysis, New York, McGraw-Hill.
  48. Samuelson, P. A. and Solow, R. M. (1960). Analytical aspects of anti-inflation policy, The American Economic Review, 50(2): 177-194.
  49. Schultze C. L. (1959). Recent inflation in the United States. In Joint Economic Committee (ed.) Employment, Growth and Price Levels, Washington, Government Printing Office.
  50. Schwarzer J. A. (2018) Cost-Push and Demand-Pull Inflation: Milton Friedman and the “Cruel Dilemma”, Journal of economic perspectives, 32(1): 195-210.
  51. Serrano F. (2004). Power relations and American macroeconomic policy, from Bretton Woods to the floating dollar standard. In Fiori J. L. (2004). O Poder Americano: 1-43, Petrópolis, Vozes.
  52. Slichter S. (1959) Inflation-A Problem of Shrinking Importance, Commercial and Financial Chronicle, 23: 134-149.
  53. Slichter S. H. (1954). Do the Wage-Fixing Arrangements in the American Labor Market Have an Inflationary Bias?, The American Economic Review, 44(2): 322-346.
  54. Solow R. (2018). A theory is a sometime thing. Review of Keynesian Economics, 6(4): 421-424.
  55. Stanley T. D. (2004). Does unemployment hysteresis falsify the natural rate hypothesis? A meta-regression analysis, Journal of Economic Surveys, 18(4): 589-612.
  56. Stirati A. (1994). The theory of wages in classical economics: a study of Adam Smith, David Ricardo, and their contemporaries, Aldershot and Brookfield, Edward Elgar Publishing.
  57. Stirati A. (2001). Inflation, unemployment and hysteresis: an alternative view, Review of Political Economy, 13(4): 427-451. DOI: 10.1080/09538250120099944
  58. Stirati, A. and W. Paternesi-Meloni (2018). A short story of the Phillips curve: from Phillips to Friedman… and back?, Review of Keynesian Economics, 6(4): 493-516.
  59. Storm S. and C. Naastepad (2009). The NAIRU, demand and technology, Eastern Economic Journal, 35(3): 309-337.
  60. Takami N. (2015). The Baffling New Inflation: How Cost-Push Inflation Theories Influenced Policy Debate in the Late-1950s United States, History of Political Economy, 47(4): 605-629. DOI: 10.1215/00182702-3321336
  61. Tarling R. and F. Wilkinson (1977). The Social Contract: post-war incomes policies and their inflationary impact, Cambridge Journal of Economics, 1(4): 395-414.
  62. Turner H. A. and Jackson D. A. S. (1970). On the Determination of the General Wage Level – A World Analysis; or “Unlimited Labour Forever”, The Economic Journal, 80(320): 827-849. DOI: 10.2307/2229901
  63. Tylecote A. (1981). Causes of the present inflation: interdisciplinary explanation of inflation in Britain, Germany and the United States, London, Macmillian.
  64. Ulman L. (1960). Collective Bargaining and Inflation, California Management Review, 2(3): 51-58. DOI: 10.2307/41166243
  65. Walker D. A. (1987) Marget, Arthur William (1899-1962). In Durlauf S. and Blume L. (eds). The New Palgrave Dictionary of Economics, London, Palgrave Macmillan.
  66. Wallerstein M., M. Golden, and P. Lange (1997). Unions, employers’ associations, and wage-setting institutions in Northern and Central Europe, 1950-1992, ILR Review, 50(3): 379-401. DOI: 10.1177/001979399705000301
  67. Wasem R. E. (2013). Tackling unemployment: The legislative dynamics of the employment act of 1946, Kalamazoo, Upjohn Press.
  68. Weisskopf T. E. (1981). The current economic crisis in historical perspective, Socialist Review 57: 9-53.

Guilherme Spinato Morlin, Inflation and Macroeconomics in the US during the Golden Age in "HISTORY OF ECONOMIC THOUGHT AND POLICY" 1/2021, pp 107-130, DOI: 10.3280/SPE2021-001005