The Baffling New Inflation

This essay examines how cost-push inflation theories, which highlight autonomous increases in wages and other production costs as a cause of inflation, played a decisive role in the policy debate over the interpretation of the price movements of the second half of the 1950s. In late 1956, economic experts, including politicians and journalists as well as economists, began to observe a peculiarity accompanying the ongoing inflation, namely, an apparent lack of excess aggregate demand, and they placed great emphasis on cost-push inflation theories in their interpretations of this peculiar phenomenon. When the recession of 1958 was accompanied by a steady increase in general prices, some experts took this as further supporting evidence for cost-push inflation. Against the background of this atypical inflation, the US Congress, then ruled by the opposition Democratic Party, initiated a large-scale inquiry into the nature and causes of inflation. These investigations produced one report in particular that emphasized cost-push theories. This essay as a whole shows how the controversy over the inflation of the late 1950s created a general perception that inflation can be at least partly controlled by measures that address cost increases in the private sector, and we suggest that this perception sowed the seeds of the Great Inflation later

Economics · Indexation · Inflation (cosmology · Keynesian economics · Macroeconomics · Monetary economics · Monetary policy · Opposition (politics · Political science · Politics · Recession · Relative price · Economic Theory and Policy · Fiscal Policies and Political Economy · Law · Monetary Policy and Economic Impact

• The Institutional Determinants of Inflation in the Cemac Zone

  Open Access•Marius Bendoma, J Landry Bikai et al.•Public Organization Review•2026

  Incluir item

• Conflict and Consensus

  Kristoffer Smemo, Samir Sonti et al.•Critical Historical Studies•2017

  Incluir item

• The Problem of Productivity

  Open Access•Susan Milner, Samuel Milner•The Business History Review•2018

  Incluir item

• Assuming Direct Control

  Open Access•Susan Milner, Samuel Milner•Journal of Policy History•2018

  Incluir item

• Exhortation and Controls. The Search for a Wage-Price Policy 1945-1971

  Beverly Kitching, Crauford D W Goodwin et al.•Southern Economic Journal•1976

  Incluir item

• Employment, Growth and Price Levels

  Hyman P Minsky, Joint Economic Committee et al.•The Review of Economics and…•1961

  Incluir item

• Brief Comments on the Recession

  Gottfried Haberler•The Review of Economics and…•1958

  Incluir item

• Friedman on the Lag in Effect of Monetary Policy

  John M Culbertson•Journal of Political Economy•1960

  Incluir item

• How About Some Meat

  Meg Jacobs, Mary M Jacobs•Journal of American History•1997

  Incluir item

• The New Classical Macroeconomics

  Th van de Klundert, Kevin D Hoover•Economica•1990

  Incluir item

• The Impact of the Union

  E H Phelps Brown, David Wright et al.•The Economic Journal•1952

  Incluir item

• The Eclipse of the Goal of Zero Inflation

  Robert Leeson•History of Political Economy•1997

  Incluir item

• Retrospectives

  Open Access•W Robert Brazelton•The Journal of Economic…•1997

  Incluir item

• Employment, Growth, and Price Levels

  Open Access•Paul Wonnacott•Political Science Quarterly•1960

  Incluir item

• The Political Economy of the Inflation-Unemployment Trade-Off

  Robert Leeson•History of Political Economy•1997

  Incluir item

• Annals of a Crusade

  Open Access•William B Harrison•American Journal of Economics and…•1981

  Incluir item