FOREIGN TRADE UNIVERSITY

DEPARTMENT OF INTERNATIONAL ECONOMICS

MACROECONOMICS ESSAY – GROUP 5

Topic: Lesson from the Past: Analysis of the 1970s Stagflation in
the United States
Credit course: Principles of Macroeconomics (KTE204E(2324-2)1.1)

Instructor: Assoc. Prof., Ph.D Hoang Xuan Binh

No. Student’s Name Student ID

1 Đỗ Lê Phương Linh 2312140803
2 Phạm Hà Phương 2312140047
3 Phạm Ngọc An 2312140806
4 Nguyễn Mai Anh 2312140819
5 Trương Hải Linh 2312140811
6 Trần Ngọc Mai 2312140034
7 Lê Minh Phương 2311140703
8 Đỗ Huyền Linh 2313140030
9 Trương Tấn Sang 2313140049

Hanoi, April 2024

 TABLE OF CONTENTS

ABSTRACT ................................................................................................................... 3

CONTENT ..................................................................................................................... 4

I. Introduction ......................................................................................................... 4

II. Literature review ................................................................................................ 5

1. Definition of stagflation ..................................................................................... 5

2. Context of the 1970s Stagflation crisis in the US .............................................. 6

III. Analysis of the 1970s Stagflation in the US ...................................................... 6

1. Contributing factors ........................................................................................... 6

1.1 Oil price shocks .......................................................................................... 7

1.2 Contributing factors .................................................................................... 9

2. Impact of stagfaltion on the US economy ....................................................... 10

3. Solutions to mitigate stagflation ...................................................................... 12

IV. Lessons learned from the stagflation crisis................................................... 13

1. Establishing monetary policy response to persistent supply shock ..................13

2. The defense of anchoring inflation expectations ..............................................14

CONCLUSION.............................................................................................................17

REFERENCES ............................................................................................................ 18

2
 ABSTRACT

Stagflation, a term that stemmed from the combination of "stagnation" and

"inflation", is an economic phenomenon that once shook the U.S. economy in the
1970s. This puzzling paradox forced policymakers to come up with new solutions
as stagflation strays from the classic theory. As stagflation is a practical example,
it is important to understand the causes as well as research past solutions to further
understand the correlation of economic factors and prepare for the future likelihood
of stagflation and similar phenomena. In this research paper, we will provide
definitions surrounding the concept of stagflation along with the analysis of the
1970s stagflation crisis in the U.S. to consequently draw lessons from this example
and provide an overall conclusion for our paper.

3
 CONTENT

I. Introduction

Understanding significant economic phenomena of the past is indispensable

in today's economic landscape. Studying stagflation in the United States during the
1970s is paramount for economists and policymakers alike. The unusual
combination of economic stagnation and inflation posed a significant challenge to
economic policies and management. This period marked a significant departure
from traditional economic models, as the economy experienced simultaneous
stagnation and inflation, challenging prevailing theories such as the Phillips curve.
By delving into the causes and consequences of stagflation, researchers aim to
uncover insights into the complex interplay of factors that contributed to this
unique economic phenomenon.
In this research, we focus on analyzing the phenomenon of stagflation in the
United States during the 1970s and the factors contributing to that, ranging from
economic policies to fluctuations in the international economy. The research scope
includes examining U.S. government economic policies, fluctuations in prices and
the labor force, as well as the impact on society such as unemployment rate,
income, and wage movements. The research period spans from the beginning to
the end of the 1970s to gain a comprehensive understanding of how stagflation
developed and its impact on the U.S. economy.

4
II. Literature review

1. Definition of stagflation

Stagflation is an economic phenomenon that entails the simultaneous

occurrence of stagnant economic growth, high unemployment, and high inflation
within an economy. It represents a departure from the conventional relationship
between inflation and unemployment, as posited by the Phillips curve.

Figure 1: The Phillips Curve indicating the relationship between inflation and
unemployment

Ordinarily, in a well-functioning economy, an inverse relationship exists

between inflation and unemployment. When inflation is high, it is expected that
unemployment will be low, as increased demand for goods and services
stimulates job creation. Conversely, in periods of high unemployment, inflation
tends to be low, as reduced demand for goods and services exerts downward
pressure on prices. However, stagflation challenges this conventional
understanding by featuring both elevated inflation and unemployment rates.

5
2. Context of the 1970s Stagflation crisis in the US

Prior to the 1960s, the prevailing economic theory held that inflation and
unemployment were inversely related. The general assumption among
economists was that high unemployment would lead to lower inflationary
pressures, as weaker demand would put downward pressure on prices.
Conversely, low unemployment was expected to result in rising inflation, as tight
labor markets would drive up wages and, in turn, consumer prices.

This model held reasonably well through much of the post-World War II
period in the United States, as policymakers were generally able to manage the
tradeoff between unemployment and inflation through the judicious use of fiscal
and monetary policies. However, the economic landscape underwent a dramatic
shift in the late 1960s and 1970s, as the U.S. economy experienced a previously
unimaginable phenomenon - stagflation. This unprecedented economic malaise
first emerged in the mid-1960s and persisted for nearly two decades, from 1965
to 1982.

During this period, inflation in the U.S. soared, reaching over 12% by 1974.
Concurrently, unemployment also rose sharply, peaking above 7% in the same
year. This combination of rapidly rising prices and stagnant economic growth,
with high joblessness, shattered the confidence of policymakers and the public
alike.

III. Analysis of 1970s Stagflation in the U.S

1. Contributing factors

While there were numerous factors contributing to the stagflation in the U.S.
during the 1970s, this essay will elaborate on the two most significant factors
directly impacting this phenomenon.

6
1.1 Oil price shocks

On October 19, 1973, the Organization of Arab Petroleum Exporting

Countries (OAPEC) implemented an oil embargo against the United State in
response to the U.S decision to resupply Israeli’s military with an emergency aid
worth $2.2 billion for the Yom Kippur War (Arab - Israeli War) (Reich, 1995).
The situation was stark as the U.S was becoming deeply reliant on foreign oil
imports. The limited production capacity of the domestic oil industry hindered its
ability to respond effectively to market shifts, resulting in a surge in oil price.

The devaluation of the dollar in the early 1970s also played a significant role
in the oil prices instituted by OPAEC. Due to the collapse of the Bretton Woods
agreement, which had fixed the value of gold at $35 an ounce (Creation of the
Bretton Woods System, 2013), the price of gold surged to $455 per ounce by the
late 1970s. This increase made gold more attractive compared to the depreciating
U.S dollar in terms of value. As oil prices were quoted in dollar terms, the
decreased oil revenues of OAPEC nations due to the falling value of dollar
prompted them to consider pricing oil in terms of gold, as perceived a more stable
currency, rather than the dollar (Oil Shock of 1973–74, 2013). The substantial
devaluation of the dollar undoubtedly contributed to the oil price shocks in the
1970s.

The oil embargo nearly quadrupled oil prices from $2.90 per barrel to $11.65
per barrel by January 1974, significantly impacting the whole economy (Oil
Shock of 1973–74, 2013). Despite the official lifting of the embargo in March
1974, oil prices remained high still (Merrill, 2007).

The golden era of cheap and plentiful oil was over, replaced by an era of
shortage and uncertainty. This abrupt increase in oil prices led to panic buying,
often resulting in hours-long lines at gas stations. Furthermore, the situation
seems to be more complicated when the rise in oil price, a key input in the
production process of several major industries, inevitably leads to an increase in

7
the price of oil-based businesses. The oil price shocks in the 1970s led to
significant disruption and uncertainty in the economy, prompting a significant
rise in demand for smaller, fuel-efficient cars (Stevens, 1973). This trend resulted
in increased consumer spending, contributing to higher inflation. The auto
industry also faced challenges in meeting the sudden demand for compact and
subcompact cars, leading to temporary shutdowns of assembly plants, which are
18 in case of General Motors and Chrysler, and layoffs of thousands of workers.
The shift towards smaller cars also influenced the competitive balance within the
industry, with manufacturers like Ford and American Motors capitalizing on the
trend by emphasizing smaller car production and major manufacturers like
General Motors and Chrysler, on the other hand, struggling with the adaptation
to the changing market.

The sudden surge in oil prices in the 1970s caused cost-push inflation with
the emergence of double - digit inflation for the first time. In 1970, the inflation
rate reached 5.5% and then continued to trend up in a range from 5.5–14.4%
through the 1970s before culminating at 14% in 1980 (The Great Inflation, 2013).
Unemployment rates simultaneously rose dramatically as businesses burdened by
higher operating costs increasingly downsized or closed. Consequently, the US
economy, previously a symbol of postwar prosperity, plunged into a severe
recession. In 1974, the GDP contracted by 0.5% in 1974, marking the first
negative GDP growth in the post - World War II era (GDP growth (annual %) -
United States, n.d.). Beyond these immediate impacts, the gas crisis also triggered
significant social and economic changes, including a shift in the US economic
structure.

The 1970s oil shock triggered stagflation, the combination of high inflation
and unemployment. Geopolitical tensions between Arab and the U.S, limited oil
production, and currency devaluation caused oil price shocks. Inflation soared,
jobs were lost, and consumer behavior shifted. This crisis reshaped the economic

8
landscape, emphasizing the complex interplay of global energy markets and
macroeconomic stability.

1.2 Failure in economic policy management

As the U.S economy witnessed a climb in unemployment rates and inflation

and a drop in manufacturing jobs, along with a costly war in Vietnam, in 1971,
former President Richard M. Nixon announced his New Economic Policy, a
program “to create a new prosperity without war”, marking the beginning of the
collapse of Bretton Woods system of fixed exchange rates established at the end
of World War II. Nixon identified a three-fold task: creating more and better jobs,
curbing the rise in the cost of living, and protecting the dollar from international
speculations. To achieve these goals, he proposed tax cuts, a 90-day freeze on
wages and prices, and the suspension of the dollar’s gold convertibility. An extra
10% tariff on all dutiable imports was also imposed to encourage the U.S’s
trading partners to adjust their currencies and trade barriers, allowing for more
imports from the United States (Nixon and the End of the Bretton Woods System,
1971–1973).

Known colloquially as the “Nixon shock”, the initiative ultimately backfired

Nixon’s intention to revitalize the U.S economy. While the measures such as tax
cuts and wage freezes were intended to address economic challenges, their
implementation, alongside other factors like the suspension of the dollar's
convertibility into gold and the imposition of tariffs on imports, contributed to an
exacerbating economic situation. Richard Nixon's decision to abandon the gold
standard and devalue the U.S. dollar against other currencies significantly
contributed to the emergence of stagflation. The devaluation of the dollar led to
an increase in the prices of imported goods and services. When the value of the
dollar decreases compared to that of other foreign currencies, it takes more dollars
to purchase the same amount of foreign goods and services, directly fueling
higher prices for imported products and services. However, while a rise in the

9
prices of goods and products was witnessed, the cost of living increased
considerably due to the depreciating purchasing power of the dollar. This
ultimately exacerbated the inflationary pressures domestically. While inflation
shot up, the economy did not experience proportional growth or, in some cases,
contracted. The failure in economic policies by authoritarians and leaders like
Richard Nixon contributed to the beginning of the largest economic crisis in the
United States during the 1970s: stagflation.

The 1970s blend of unemployment and inflation was a real challenge to

conventional economic views. Regarding the recognition of the damage of this
cost-push inflation, there was a shift in emphasis towards monetary policy in
addressing stagflation. The adoption of monetarism's approach to stabilizing the
money supply was not embraced until the period preceding the 1970s stagflation
and after the Second World War (Wang, 2023). The Federal Reserve's efforts to
address stagflation through monetary policy only worsened the situation. In the
period of 8 years from 1971 to 1978, the Federal Reserve adopted a strategy of
raising the federal fund rates to fight inflation, only to subsequently lower them
to address recessionary pressures. However, these stop-and-go measures created
confusion and uncertainty among households and firms, contributing to a cycle
of economic instability and ultimately fueling further inflationary pressures.

2. Impact of stagflation on the U.S. economy

In 1964, inflation was only 1%, while unemployment was 5%, marking the
last year before the stagflation occurred. This steadily rose by the mid-1960s, as
the Federal Reserve implemented monetary policies that were generally thought
to maintain low levels of unemployment by keeping modestly higher inflation
rates.

However, these policies were unsuccessful, leading to an inflation rate of

5.46% in 1969. The Oil Shock of 1973–1974 exacerbated the situation, where the

10
Organization of Arab Petroleum Exporting Countries (OAPEC) conducted an oil
embargo that ceased U.S. oil imports from participating OPEC nations. This led
to higher consumer prices and an inflation rate of 11.05% in 1974, along with
altering the world price of oil.

Nevertheless, between 1965 and 1982, American economists experienced

their first-ever stagflation, where inflation hit over 12% and unemployment
reached above 7% in 1974. This was known as the Great Inflation. It was fueled
by several causes — fiscal and monetary policies, the oil shocks of 1973 and
1979, lack of constraint on inflation rates and a loss in the Federal Reserve’s
credibility. The Federal Reserve failed to consider how the trade-off between
lower unemployment and higher inflation is risky, given how it may require ever-
higher inflation to maintain. This led to unprecedented inflation rates, which rose
from 1.58% to a peak of 13.55%, while unemployment hit a high of 9% in 1975.

In 1980, the inflation rate spiked again, reaching 13.55%. The introduction
of credit controls caused this in early 1980 along with the Monetary Control Act,
which deregulated institutions that accept deposits. Stagflation can lead to
stagnant or declining real incomes for many Americans. During the stagflationary
period of the late 1970s and early 1980s, real wages struggled to keep pace with
inflation. For example, between 1979 and 1982, real wages in the U.S. declined
by around 4%.

Stagflation also exacerbates income inequality. While some individuals may

see their incomes rise to keep pace with inflation or benefit from investments in
assets like real estate or stocks, others may experience stagnant or declining
incomes. During the stagflationary period of the late 1970s and early 1980s,
income inequality in the U.S. increased, with the top earners seeing
disproportionate gains compared to lower-income individuals.

Stagflation can deter business investment. High inflation and economic

uncertainty may lead businesses to postpone or scale back investment in new

11
projects, expansion plans, or hiring. During the stagflationary period of the late
1970s and early 1980s, business investment in the U.S. was subdued as firms
grappled with high inflation and weak economic growth.

The high inflation rate and economic shocks during the Great Inflation
rocked the United States, resulting in stagnant and even negative growth for
almost two decades. By Q4 of 1973, the real GDP sat at 5,731 and fell to 5,551
by Q1 of 1975 — a loss of 180 points. Fortunately, the economy rebounded to
Q1 1973 levels by late 1975.

By 1980, when the Federal Reserve imposed more strict credit controls, the
real GDP briefly fell from 6,842 in Q1 of 1980 to 6,693 in Q3 of the same year.

3. Solutions to mitigate stagflation

In addressing the stagflation in the 1970s in the United States, several

measures were implemented with varying degrees of success. Initially, President
Nixon's attempt to tackle inflation involved a 90-day wage and price freeze and
the abandonment of the Bretton Woods system, albeit with limited long-term
impact. Furthermore, Arthur Burns pursued a policy of increasing the money
supply and loosening monetary policy, ultimately exacerbating either inflation or
unemployment.

The turning point came with President Reagan's encouragement of the

Federal Reserve's tightening monetary policy under Chairman Paul Volcker.
Volcker's decisive actions, notably raising the federal funds rate to 20% by 1980,
signaled a commitment to combating inflation. Despite initial economic
repercussions, including a brief recession and rising unemployment, this strategy
proved effective in curbing inflation over time. The persistence in fighting
inflation through higher interest rates and stricter reserve management, alongside
initiatives like the Monetary Control Act, led to a prolonged recession but
ultimately marked the end of the era of double-digit inflation.

12
 Throughout this period, the economy endured fluctuations and challenges,
but the Fed's resolute commitment to low inflation eventually restored credibility
and stability. By the recession's end in November 1982, inflation had
significantly decreased, signaling the conclusion of the Great Inflation. This
concerted effort underscored the importance of decisive monetary policy in
addressing stagflation, demonstrating that sustained measures aimed at
controlling inflation could lead to long-term economic growth and stability.

IV. Lessons learned from the stagflation crisis

1. Establishing monetary policy response to persistent supply shocks

Adverse supply shocks such as the oil price shocks of the 1970s or the recent
energy price increase pose a challenge for monetary policy. A strong
contractionary monetary policy response would reduce the inflationary pressure
triggered by the supply shock, but at the same time it would very likely have a
further negative impact on economic activity. An optimal monetary policy
response to persistent supply shocks would generally be to tighten policy in order
to ensure that inflation stabilizes towards the target, but still allow a certain
degree of tolerance for temporary deviations of the inflation rate from its target.
Figure 2 shows, by way of a stylised example, the optimal monetary policy
response to a persistent supply shock in a New Keynesian model with price and
wage rigidities. In response to the supply shock, implemented here as a persistent
cost-push shock, monetary policy rates are raised in order to guide the inflation
rate back to target. The central bank nonetheless allows the inflation rate to rise
temporarily (blue line). If, by contrast, the inflation rate were stabilised strictly
(red line), there would be an (excessively) strong contraction of economic
activity. Thus, it may prove expedient to initially “look through” supply shocks
and to tolerate some longer-lasting deviations from the inflation target, provided

13
that long-term inflation expectations remain firmly anchored. The latter is, by
construction, the case in the rational expectations New Keynesian model.

Figure 2: Optimal monetary policy in response to a persistent supply shock

Note: The panels show the optimal response by the monetary policy interest rate
(bottom left panel) to a given exogenous supply shock (bottom right panel; a
“cost-push shock”) and its macroeconomic implications for the output gap (top
left panel) and inflation (top right panel). X-axis: time horizon in quarters. For
the output gap and supply shock panels: Y-axis shows percentage deviations from
the long-term equilibrium. For the inflation and interest rates panels: Y-axis
shows percentage point deviations from the long-term equilibrium. The blue line
plots the optimal response by the monetary policy interest rate given a micro-
founded loss function that comprises stabilizing not just inflation but the output
gap and wage inflation as well. The red line indicates the interest rate response
given a loss function that aims exclusively to strictly stabilize inflation.

2. The defense of anchoring inflation expectations

However, monetary policymakers cannot take the stability of inflation

expectations for granted. The anchoring of inflation expectations needs to be

14
defended. A central bank that does not decisively combat inflationary
developments might itself contribute to a de-anchoring. A concept for assessing
a possible de-anchoring of long-run inflation expectations is provided by the
literature on learning (E-stability). In models in which agents do not have rational
expectations, but form their expectations by means of an adaptive learning
process, agents’ long-term inflation expectations may deviate from the central
bank’s inflation target. In such a framework, it can thus be analyzed if the central
bank is actually able to guide inflation expectations successfully back to its target
rate and thereby successfully anchor inflation expectations.

As pointed out above, de-anchored inflation expectations can be considered

the root cause of the stagflationary developments in the United States in the 1970s
and early 1980s. At that time, inflation rates became entrenched at elevated
levels, and the Federal Reserve failed to tighten its monetary policy stance
aggressively enough to lean against inflationary pressures and keep inflation
expectations anchored. However, in an environment with high trend inflation it
is even harder for the central bank to keep inflation expectations anchored. Using
a stylized New Keynesian model in which agents build their inflation
expectations based on available data via adaptive learning, Figure 3 illustrates
that the central banks’ ability to anchor inflation expectations diminishes with an
increasing level of the trend inflation rate. The chart compares different monetary
policy rules that vary from each other in terms of how strongly they respond to
changes in output (Y-axis) and inflation (X-axis). In the white area, a given
response to changes in inflation and output is sufficient to anchor inflation
expectations. In the gray area, the responses to inflation and output fail to anchor
inflation expectations. The panels of the chart show that the white area is
significantly smaller for a trend inflation rate of 4% (right-hand panel of Figure
3) than for a trend inflation rate of 2% (left-hand panel of Figure 3). A higher
trend rate of inflation thus ultimately increases the risk that a given monetary
policy response will no longer be sufficient to anchor inflation expectations. If

15
trend inflation rates are higher, conventional interest rate policy is less effective,
mainly due to a flattening of the Phillips curve. In order to nonetheless be able to
steer inflation developments, the central bank therefore generally needs to take a
more aggressive approach towards inflation.

Figure 3: Impact of trend inflation on the anchoring of inflation expectations

Note that trend inflation is considered to be determined by the long-run

(steady-state) inflation rate prevailing in the economy. The figure shows areas
where inflation expectations are anchored (white) and unanchored (gray) for a
trend inflation rate of 2% (left-hand panel) and 4% (right-hand panel) and
depending on the specification of the monetary policy response coefficients to
deviations in inflation (X-axis) and output (Y-axis) from their respective targets.
Figure is based on Ascari, Florio and Gobbi (2017) and Bundesbank (2018).

16
 CONCLUSION

Stagflation is a complex economic phenomenon that requires meticulous

research to truly understand. It runs counter to what economists assumed to be
true from the 1960s backwards, when inflation was accompanied by high
unemployment rates and economic downturns. During the research process of the
nightmare named Stagflation in the United States during the 1970s, many causes
were identified, but the oil crisis and misguided policies of those in power
officially plunged the country into a severe crisis.
Despite over 40 years having passed, we still haven't truly found a solution
to combat stagflation. As of the current moment, the only thing we can do is to
prevent stagflation through proactive policies. Looking forward, the lessons
gleaned from the stagflation crisis remain pertinent in navigating contemporary
economic challenges, including the trade-offs between inflation and
unemployment, the impact of supply shocks on price stability, and the role of
policy credibility in anchoring inflation expectations.

17
 REFERENCES

1. Ascari, G., A. Florio and A. Gobbi (2017): Transparency, expectations

anchoring and inflation target, European Economic Review, Vol. 91, pp. 261-
273.

2. Clarida R., J. Galí and M. Gertler (2000), Monetary Policy Rules and

Macroeconomic Stability: Evidence and Some Theory, Quarterly Journal of

Economics, Vol. 115, pp.147-180.

3. Cogley, T., and A. M. Sbordone, (2008). Trend inflation, indexation, and

inflation persistence in the New Keynesian Phillips curve. American Economic

Review, 98(5), pp. 2101-26.

4. Coibion O. and Y. Gorodnichenko (2011), Monetary Policy, Trend Inflation,

and the Great Moderation: An Alternative Interpretation, American Economic

Review, Vol. 101, pp. 341-370.

5. Deutsche Bundesbank (2018), Lower bound, inflation target and the anchoring

of inflation expectations, Monthly Report, June 2018.

6. Enders, A. (2022). Stagflation in the 1970s: lessons for the current situation.

SUERF Policy Brief.

7. Erceg, C. J., D. W. Henderson and A. T. Levin (2000). Optimal monetary

policy with staggered wage and price contracts, Journal of Monetary

Economics 46(2): pp. 281-313.

8. Evans, G. W. and S Honkapohja (2001), Learning and expectations in

macroeconomics, Princeton University Press. Eusepi, S. and B. Preston (2018),

The science of monetary policy: an imperfect knowledge perspective, Journal
of Economic Literature, 56 (1), pp 3-59.

18
9. Ireland, P. N. (2007), Changes in the Federal Reserve's inflation target: causes

and consequences, Journal of Money, Credit and Banking, Vol. 39(8), pp.
1851-1882.

10. Jackson, A. (2023, December 11). Is the U.S. economy heading for stagflation?

Forbes Advisor. https://www.forbes.com/advisor/investing/stagflation/

11. Lubik T. and C. Matthes (2016), Indeterminacy and learning: An analysis of

monetary policy in the Great Inflation, Journal of Monetary Economics, Vol.

82, pp. 85-106.

12. Merrill, K. R. (2007). The Oil Crisis of 1973-1974: A Brief History with

Documents. In K. R. Merrill, The Oil Crisis of 1973-1974: A Brief History with

Documents.

13. Nixon and the End of the Bretton Woods System, 1971–1973. (n.d.). Retrieved

from Office of the Historian: https://history.state.gov/milestones/1969-

1976/nixon-shock

14. Nixon and the End of the Bretton Woods System, 1971–1973. (n.d.). Retrieved

from Office of the historian.

15. Orphanides, A. (2004), Monetary Policy Rules, Macroeconomic Stability, and

Inflation: A View from the Trenches, Vol. 36(2), pp. 151-175.

16. Paulus, N. (2024, March 7). Stagflation in Economics: History, causes &

characteristics. MoneyGeek.com

17. Reich, B. (1995). Securing the Covenant: United States-Israel Relations after

the Cold War. In B. Reich, Securing the Covenant: United States-Israel

Relations after the Cold War.

18. Reis, R. (2021), Losing the Inflation Anchor, CEPR Discussion Papers 16664,

October 2021.

19
19. Roger W. Ferguson Jr. (2022, March 3). "Stagflation: Real Threat or

Imagined?.". Council on Foreign Relations.

20. Romer, C. D. and D. Romer (2002), The evolution of economic understanding

and postwar stabilization policy, Proceedings – Economic Policy Symposium –

Jackson Hole, pp. 11-78.

21. Stevens, W. K. (1973). Rush to Smaller Cars Spurs Detroit to Alter Assembly

Lines. The New York Times.

22. Wang, Z. (2023). The “Stagflation” Risk and Policy Control: Causes,

Governance and Inspirations. China Finance and Economic Review.

23. Bank for International Settlements (2022), Annual economic report.

24. Creation of the Bretton Woods System. (2013). Federal Reserve History.

25. GDP growth (annual %) - United States. (n.d.). Retrieved from The World

Bank:https://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG?locations=
US

26. Oil Shock of 1973–74. (2013). Federal Reserve History.

27. The Great Inflation. (2013). Federal Reserve History.

20