Research
BPEA | 1975 No. 1Alternative Responses of Policy to External Supply Shocks
Robert J. Gordon
Robert J. Gordon
Stanley G. Harris Professor of the Social Sciences
- Northwestern University
Robert J. Gordon
Stanley G. Harris Professor of the Social Sciences
- Northwestern University
1975, No. 1
DURING 1973 and 1974 reductions in supplies of food (through natural causes) and of oil (through unnatural causes) simultaneously lowered the real income of U.S. nonfarm workers and raised the rate of inflation. An inflation-cum-recession induced by lower supplies of raw materials may call for a policy response different from the traditional tonic of demand restriction called for by a “garden-variety” inflation generated by excess demand.