Created 3/10/1998
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Growth and Fluctuations, 1980-1998

J. Bradford DeLong

The 1980s began with the Volcker disinflation: Federal Reserve Chair Paul Volcker's attempt to restore confidence in the inflation-fighting commitment of the Federal Reserve and to reduce inflation from near 10 percent per year to low levels.

The Volcker disinflation was successful, but at a cost: the steepest recession of the post-WWII era, and unemployment that peaked near 10%.

The Volcker disinflation was followed by a recovery that was not as strong as it might have been because the Reagan deficits reduced the rate of capital accumulation. The short Gulf War recession at the end of the 1980s was followed by another recovery, this time leading to a balanced federal budget, and to inflation under 2 percent per year and unemployment under 5 percent.

Inflation 1960-Present    Unemployment 1960-Present    Phillips Curve    Growth and Fluctuations, 1980-1998    Long-Run Growth  

Professor of Economics J. Bradford DeLong, 601 Evans Hall, #3880
University of California at Berkeley
Berkeley, CA 94720-3880
(510) 643-4027 phone (510) 642-6615 fax

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