The Control of Inflation: An Inaugural Lecture Delivered in Cambridge on 4 March 1958

The Control of Inflation: An Inaugural Lecture Delivered in Cambridge on 4 March 1958

The Control of Inflation: An Inaugural Lecture Delivered in Cambridge on 4 March 1958

The Control of Inflation: An Inaugural Lecture Delivered in Cambridge on 4 March 1958

Excerpt

The purpose of this lecture is to consider how one can best put a stop to the inflation of prices. But before we try to find the answer it is useful to know whether this is an important question or not. For the extent to which we should be prepared to recast our present policies and institutions in order to avoid an inflation of prices will depend upon the importance which we attach to the objective of stable prices.

If it were a question of stopping a serious price deflation, it would be a waste of time to ask whether the objective was an important one. Such a deflationary fall in selling prices, when money wage rates cannot easily be lowered, will impede economic growth and raise unemployment. This has been a familiar and agreed theme among economists since the Great Depression of the 1930's. But during the last decade prices in this country have been rising by 4 or 5 per cent per annum, and it is worth pausing to ask whether we need to make any very great efforts to prevent a continuing inflation of money prices and costs of this kind. Might we not remain content with policies and institutions . . .

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