Postwar Macroeconomics: The Evolution of Events and Ideas
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.
|Date of creation:||Feb 1980|
|Date of revision:|
|Publication status:||published as Gordon, Robert J. "Postwar Macroeconomics: The Evolution of Events and Ideas." The American Economy in Transition, edited by Martin Feldstein, pp. 101-182. Chicago: University of Chicago Press, 1980.|
|Contact details of provider:|| Postal: |
Web page: http://www.nber.org
More information through EDIRC
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.:
- Phelps, Edmund S, 1978. "Commodity-Supply Shock and Full-Employment Monetary Policy," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 10(2), pages 206-21, May.
- Milton Friedman, 1959.
"The Demand for Money: Some Theoretical and Empirical Results,"
Journal of Political Economy,
University of Chicago Press, vol. 67, pages 327.
- 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.
- Milton Friedman, 1959. "The Demand for Money: Some Theoretical and Empirical Results," NBER Books, National Bureau of Economic Research, Inc, number frie59-1, 07.
- 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.
- 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.
- 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.
- 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.
- 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.
- Eisner, Robert, 1969. "Fiscal and Monetary Policy Reconsidered," American Economic Review, American Economic Association, vol. 59(5), pages 897-905, December.
- Edgar L. Feige & Douglas K. Pearce, 2004. "The Wage-Price Control Experiment--Did It Work?," Macroeconomics 0408003, EconWPA.
- 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.
- 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.
When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:0459. 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 references are entirely missing, you can add them using this form.