Advanced Search
MyIDEAS: Login

Postwar Macroeconomics: The Evolution of Events and Ideas

In: The American Economy in Transition

Contents:

Author Info

  • Robert J. Gordon
  • Arthur M. Okun
  • Herbert Stein

Abstract

This paper traces the evolution of macroeconomic events and ideas from the late 1940s to the present day. After a brief introduction that highlights the unique features of the main macroeconomic variables as compared to their behavior before 1947, the paper turns to an analysis of four main postwar sub-periods. The analysis of each sub-period begins with a summary of the dominant conceptual framework popular at the time, reviews the most surprising features of both demand fluctuations and supply phenomena, and concludes with a retrospective evaluation of policy. Many shifts in macroeconomic thinking can be traced to the influence of particular events. The small role that monetary changes played in explaining demand fluctuations in the first postwar decade helped maintain intact the Keynesian multiplier framework, but the increasing importance of autonomous monetary movements in the second decade laid the groundwork for a greater emphasis on the potency of monetary policy in the late 1960s. The widespread acceptance of monetarism owes much to the coincidence in 1968 of an unexpected acceleration in inflation together with the failure of the tax surcharge enacted in that year. Similarly, the increased degree of inertia evident in the behavior of inflation from 1954 on helped win ready acceptance for the idea of a stable Phillips-curve tradeoff, while the refusal of inflation to abate in 1970 helped solidify the victory of the natural hypothesis. A major theme of the paper is the gradual but profound shift in macroeconomics from the dominance of demand issues to a new emphasis on supply topics. Price controls, crop failures, and OPEC actions in the l970s have brought supply shocks to the forefront of policy discussions, revived fiscal policy asa means of countering supply shocks, and lessened support for a monetarist reliance on simple policy rules.

(This abstract was borrowed from another version of this item.)

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.nber.org/chapters/c11296.pdf
Download Restriction: no

Bibliographic Info

as in new window

This chapter was published in:

  • Martin Feldstein, 1980. "The American Economy in Transition," NBER Books, National Bureau of Economic Research, Inc, number feld80-1, May.
    This item is provided by National Bureau of Economic Research, Inc in its series NBER Chapters with number 11296.

    Handle: RePEc:nbr:nberch:11296

    Contact details of provider:
    Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
    Phone: 617-868-3900
    Email:
    Web page: http://www.nber.org
    More information through EDIRC

    Related research

    Keywords:

    Other versions of this item:

    References

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
    as in new window
    1. Milton Friedman, 1959. "The Demand for Money: Some Theoretical and Empirical Results," NBER Chapters, in: The Demand for Money: Some Theoretical and Empirical Results, pages 1-29 National Bureau of Economic Research, Inc.
    2. Edgar L. Feige & Douglas K. Pearce, 2004. "The Wage-Price Control Experiment--Did It Work?," Macroeconomics 0408003, EconWPA.
    3. Edward M. Gramlich, 1979. "Macro Policy Responses to Price Shocks," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 10(1), pages 125-166.
    4. Gordon, Robert J, 1970. "The Brookings Model in Action: A Review Article," Journal of Political Economy, University of Chicago Press, vol. 78(3), pages 489-525, May-June.
    5. John A. Carlson, 1977. "A Study of Price Forecasts," NBER Chapters, in: Annals of Economic and Social Measurement, Volume 6, number 1, pages 27-56 National Bureau of Economic Research, Inc.
    6. Eisner, Robert, 1969. "Fiscal and Monetary Policy Reconsidered," American Economic Review, American Economic Association, vol. 59(5), pages 897-905, December.
    7. Stephen M. Goldfeld, 1973. "The Demand for Money Revisited," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 4(3), pages 577-646.
    8. Leonall C. Andersen & Jerry L. Jordon, 1968. "Monetary and fiscal actions: a test of their relative importance in economic stabilization," Review, Federal Reserve Bank of St. Louis, issue Nov, pages 11-23.
    9. Perloff, Jeffrey M. & Wachter, Michael L., 1979. "A production function--nonaccelerating inflation approach to potential output : Is measured potential output too high?," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 10(1), pages 113-163, January.
    10. Robert J. Gordon, 1975. "Alternative Responses of Policy to External Supply Shocks," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 6(1), pages 183-206.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as in new window

    Cited by:
    1. Alexandre Flávio Silva Andrada, 2014. "Um Estudo Do Discurso Doutrinário De Robert E. Lucas Jr. Método E História Das Ideias Acerca Das Análises De Ciclos Econômicos," Anais do XLI Encontro Nacional de Economia [Proceedings of the 41th Brazilian Economics Meeting] 005, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics].
    2. Francis X. Diebold & Glenn D. Rudebusch, 1991. "Have postwar economic fluctuations been stabilized?," Working Paper Series / Economic Activity Section 116, Board of Governors of the Federal Reserve System (U.S.).
    3. Hume, Michael & Sentance, Andrew, 2009. "The global credit boom: challenges for macroeconomics and policy," Discussion Papers 27, Monetary Policy Committee Unit, Bank of England.
    4. J. Bradford De Long, . "America's Peacetime Inflation: The 1970s," J. Bradford De Long's Working Papers _104, University of California at Berkeley, Economics Department.
    5. Kala Krishna & Cemile Yavas, 2001. "Lumpy Consumer Durables, Market Power, and Endogenous Business Cycles," NBER Working Papers 8296, National Bureau of Economic Research, Inc.
    6. Xavier Gabaix, 2005. "The Granular Origins of Aggregate Fluctuations," 2005 Meeting Papers 470, Society for Economic Dynamics.
    7. J. Bradford De Long, 1996. "America's Only Peacetime Inflation: The 1970s," NBER Historical Working Papers 0084, National Bureau of Economic Research, Inc.
    8. J. Bradford De Long, . "Keynesianism, Pennsylvania-Avenue Style: Some Economic Consequences of the 1946 Employment Act," J. Bradford De Long's Working Papers _105, University of California at Berkeley, Economics Department.
    9. John V. Duca, 1995. "Regulatory changes and housing coefficients," Working Papers 9512, Federal Reserve Bank of Dallas.
    10. James H. Stock & Mark W. Watson, 1998. "Business Cycle Fluctuations in U.S. Macroeconomic Time Series," NBER Working Papers 6528, National Bureau of Economic Research, Inc.
    11. Peter Temin, 1998. "Causes of American business cycles: an essay in economic historiography," Conference Series ; [Proceedings], Federal Reserve Bank of Boston, vol. 42(Jun), pages 37-64.

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:nbr:nberch:11296. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.