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The Political Economy of Wage and Price Controls: Evidence from the Nixon Tapes

Author

Listed:
  • Burton A. Abrams

    (Department of Economics,University of Delaware)

  • James L. Butkiewicz

    (Department of Economics,University of Delaware)

Abstract

On August 15, 1971, Richard Nixon imposed the first and only peacetime wage and price controls in U.S. history. The Nixon tapes, personal tape recordings made during the presidency of Richard Nixon, are now available to the public and provide a unique body of evidence to investigate the motivations for Nixon’s macroeconomic policies. We have uncovered and report in this paper evidence that Nixon manipulated both monetary and fiscal policies to create a political business cycle that helped secure his reelection victory in 1972. Nixon was very knowledgeable about economic matters and understood the risks to the economy of his macroeconomic policy actions and the imposition of wage and price controls, but chose to tradeoff longer-term economic costs to the economy for his own short-term political gain.

Suggested Citation

  • Burton A. Abrams & James L. Butkiewicz, 2007. "The Political Economy of Wage and Price Controls: Evidence from the Nixon Tapes," Working Papers 07-10, University of Delaware, Department of Economics.
    • Handle: RePEc:dlw:wpaper:07-10.
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    File URL: http://graduate.lerner.udel.edu/sites/default/files/ECON/PDFs/RePEc/dlw/WorkingPapers/2007/UDWP2007-10.pdf
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    References listed on IDEAS

    as
    1. Burton A. Abrams & James L. Butkiewicz, 2012. "The Political Business Cycle: New Evidence from the Nixon Tapes," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 44(2‐3), pages 385-399, March.
    2. Alberto Alesina & Nouriel Roubini & Gerald D. Cohen, 1997. "Political Cycles and the Macroeconomy," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262510944, December.
    3. Burton A. Abrams, 2006. "How Richard Nixon Pressured Arthur Burns: Evidence from the Nixon Tapes," Journal of Economic Perspectives, American Economic Association, vol. 20(4), pages 177-188, Fall.
    4. William D. Nordhaus, 1975. "The Political Business Cycle," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 42(2), pages 169-190.
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    Cited by:

    1. James L. Butkiewicz & Scott Ohlmacher, 2021. "Ending Bretton Woods: evidence from the Nixon tapes," Economic History Review, Economic History Society, vol. 74(4), pages 922-945, November.
    2. Alexandre Chirat & Basile Clerc, 2023. "Convergence on inflation and divergence on price-control among Post-Keynesian pioneers: insights from Galbraith and Lerner," EconomiX Working Papers 2023-4, University of Paris Nanterre, EconomiX.

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    More about this item

    Keywords

    Wage and Price Controls; Political Business Cycle; Macroeconomic Policy;
    All these keywords.

    JEL classification:

    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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