The quarter-century or so after World War II was a period when growth was
relatively fast, demand was high, and unemployment was low--and when there
were no large fluctuations as defined in this study. The character of this
chapter is therefore different from that of the other three historical chapters: it
is not a question of detective work as to why large recessions occurred, for there
were none. The period--here referred to in shorthand as the Golden Age--
does however raise some large questions of a sort central to the purpose of this
study.

Section 7.1 gives an overview of the period. Section 7.2 then considers the
main questions: what caused fast growth and high demand to continue for so
long, or prevented small recessions developing (as in other periods) into big
ones? Were the conditions that produced the Golden Age simply exceptional
in the history of developed economies--something we are unlikely to see again?
If so, what did this lucky chance consist of?

While there were no large fluctuations, there was a succession of small ones.
It is useful [s. 7.3] to compare these with the larger fluctuations that occurred
in other periods, and to look again at the question, once much discussed, of
whether they were due to mistaken policy or to something more basic.

Section 7.4 comes back to the larger issues. Did this Golden Age contain
within itself the seeds of its own destruction? Were there developments in the
period (such as accelerating inflation, or the flagging of investment demand)
which would anyhow have brought the long period of fast growth and high
demand to an end without an exogenous shock? Finally, section 7.5 draws
some general conclusions about the behaviour of the economy.

Relatively few studies have directly addressed the larger issues discussed
here, though there have heen a series of studies of parts or aspects of the
period. ¹ Much of the discussion of the post-1973 period and the continuing
general macroeconomic debate also bears on the questions discussed. Many
studies, including my earlier book ( Dow 1964), have discussed the genesis of
the minor fluctuations and will be noted below.

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