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The Costs and Benefits of Cutting Inflation
Author(s) -
BUDD ALAN,
DICKS GEOFFREY
Publication year - 1982
Publication title -
economic outlook
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.1
H-Index - 8
eISSN - 1468-0319
pISSN - 0140-489X
DOI - 10.1111/j.1468-0319.1982.tb00726.x
Subject(s) - slogan , economics , unemployment , inflation (cosmology) , treasury , keynesian economics , term (time) , misery index , order (exchange) , real interest rate , full employment , government (linguistics) , monetary policy , macroeconomics , monetary economics , finance , politics , linguistics , philosophy , physics , quantum mechanics , theoretical physics , political science , law , history , archaeology
In recent speeches Treasury Ministers have coined a new slogan. They argue that inflation is not an alternative to high unemployment but a fundamental cause of it. They use this slogan to attack those who suggest that thefight against inflation should be slackened ‐ at least briefly ‐ in order to reduce unemployment. In this Economic e iewpoint we examine the arguments about the relation between inflation and unemployment. We suggest that although inflation may be a cause of unemployment in the long term there is an inescapable short‐term choice to be made between reducing unemployment and reducing inflation. We explain why this choice arises and also discuss the longer‐term effects of counter‐inflationary policies. Finally we examine the record of this Government's policies so far.