Government and Monetary Policymakers' Interactions Unveil Cause of Great Inflation
The Great Inflation was caused by mistakes made by both the government and monetary policymakers, not just the latter. A new model shows how inflation can rise even with a low target, explaining why inflation was high during that time. The errors were due to interactions between the government and monetary policymakers, not just one side. This model also fits with how the Great Inflation affected other countries.