Explaining America's Great Inflation
Acceleration of US inflation in the 1960s caused by Bretton Woods the exit and the Treasury's role in defending the dollar, say Michael Bordo and Barry Eichengreen, in a new paper.
The authors argue the Federal Reserve's commitment to stability of the dollar exchange rate under Bretton Woods anchored inflation expectations and prevented inflation from taking off in response to shocks.
They also find that as the Treasury after 1965 assumed more responsibility for the balance of payments the Fed
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