№ 7/2020

Fìnansi Ukr. 2020 (7): 73–91https://doi.org/10.33763/finukr2020.07.073

MONETARY POLICY

KHOKHYCH Dmytro ¹

¹Kyiv National Economic University named after Vadym Hetman
OrcID ID : https://orcid.org/0000-0003-3787-939X

A century of experience of inflation process development in the USA

The article discusses the historical experience of the development of inflationary processes in the United States, taking into account the cyclical development of the economy during 1913-2013. It examines six inflation periods in the USA: 1913-1929; 1929-1941; 1941-1951; 1951-1968; 1968-1983; 1983-2013. The dynamics of inflation in certain periods is associated with the peculiarities of the historical development, economic dependence on the political power and the goals of the administration. Analysis of the CPI components of World War I indicates a wide range of price increases for this period: almost every year, there is a sharp increase in inflation. President Roosevelt’s new course aimed at overcoming the economic crisis was successful due to strengthening the monetary policy. The era of World War II is characterized by the rapid inflation, which led to price controls that held it back during the rest of the war. The period 1951-1968 is characterized by a relative price stability. The shortfall in federal funds during the 1960s led to inflation due to the Vietnam War. The period 1968-1983 covered the rapid inflation of the late 1960s, stagflation during the 1970s and double-digit inflation in the early 1980s. The energy crisis of 1973-1974 led to the unfolding of a new phase in the American inflation. Its second period occurred during 1979-1980, reaching an even greater peak than the first, before the price index became negative in 1982, when the period of high inflation ended. The Age of Inflation 1983-2013 is characterized by significantly less volatility than in the 1970s. It was possible to control inflation in the 1990s thanks to the successful implementation of the inflation-targeting regime. The consumer price index proved to be volatile at the beginning of the second millennium, which in 2008 resulted in another economic recession. Despite Americans’ concerns about deflation and a possible recovery in inflation, US price fluctuations since 2010 fall within the inflation target.

Keywords:S. Bureau of Labor Statistics, consumer price index, consumer spending, deflation, energy crisis, expectations, inflation

JEL: E31, E32

KHOKHYCH D. . A century of experience of inflation process development in the USA / D. . KHOKHYCH // Фінанси України. - 2020. - № 7. - C. 73-91.

Article original in Ukrainian (pp. 73 - 91)

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