Federal Reserve Chairman Paul Volcker is widely acclaimed as the person who vanquished and conquered inflation in the early 1980s. By implementing a monetary policy inspired from Monetarist prescriptions, he is thought as having restored the ability of the Fed to control the money supply and to bring down price instability. Yes, the economy suffered but the pain was worth it. Volcker received many accolades with Chairman Alan Greenspan considering him the “most effective chairman in the history of the Federal Reserve System”.
A careful reading of the Federal Open Market Committee (FOMC) transcripts and data available, however, provides quite a different narrative. Aside from a few true believers, nobody at the FOMC took Monetarism seriously.…
Monetary Policy Institute Blog (Feb 20)
The Volcker Myths
Eric Tymoigne | Associate Professor of Economics at Lewis and Clark College, Portland, Oregon; and Research Associate at the Levy Economics Institute of Bard College
Eric Tymoigne | Associate Professor of Economics at Lewis and Clark College, Portland, Oregon; and Research Associate at the Levy Economics Institute of Bard College
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