Interest Rates and Inflation: Hearing Before the Subcommittee on Economic Stabilization of the Committee on Banking, Housing, and Urban Affairs, United States Senate, Ninety-sixth Congress, Second Session ... February 1, 1980

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Page 1 - The views expressed are my own and do not necessarily reflect those of the Brookings staff members or the officers and trustees of the Brookings Institution.
Page 6 - A mild recession is too weak and voluntary incomes programs have lost their credibility. Given a desire to slow the inflation, the choice is rapidly being reduced to one of severe recession versus wage-price controls.
Page 49 - Stated briefly, the index is designed as a measure of the changes in the prices of goods and services purchased by wage and clerical employees in private industry and in Government.
Page 7 - A program of general wage-price controls, restrictions on housing and energy demand, sharp cutbacks in government programs, and a continuation of slow demand growth are not easy measures to sell even on a temporary basis.
Page 6 - There is still the possibility that a combination of controls and demand restraint can reduce the magnitudes of unemployment and idle capacity substantially below those required by a policy of relying on demand restraint alone.
Page 6 - When government, however, adopts a voluntary or mandatory wage-price program, it becomes responsible in the public's mind for all prices — even those in relatively competitive markets or that are externally determined. Thus, government efforts to stabilize prices in the areas of food, energy, and housing take on added importance. Price and wage controls cannot be applied to situations of shortages; yet no program can succeed if it ignores inflation developments in these fundamental areas.
Page 77 - The committee stands in recess. [Whereupon, at 12:35 pm, the hearing was adjourned...
Page 6 - ... who gets a rebate. An excise tax is administratively simpler — particularly if one ignores any complex equity considerations and simply rebates the tax by lowering other taxes. Alternatively, given the uncertainty about the response of consumer demand to higher gasoline prices, a rationing system produces a known quantity effect, and the resale value of the coupon would not be included in official indexes that are used to, escalate other wages and prices. Thus, it focuses the consumer's attention...
Page 6 - A stabilization of grain prices is the key element to avoiding sharp increases in food prices. The current beef shortage is primarily a continuing reflection of the previous grain crisis when high feeding costs led to sharp reductions in beef herds. If the government focuses on stabilizing the grain market, there is a very limited potential for inflation shocks in other areas that cannot be quickly reversed by normal market responses.
Page 5 - Conservation must be a dominant element of near-term energy policy; the continued slow growth of productivity will severely limit real-income gains and intensify the conflicts among social groups, and there is no cheap means of breaking an inflation that has become deeply imbedded in the economic structure. The political problem is to shift the focus of public discussion away from the fruitless search for painless solutions to the question of how the costs of the adjustments can be allocated in the...

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