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Macroeconomic Forecast for 195 Countries 2021 Including Five Year History

Inflation and the Fed: How Congress Should Approach Monetary Policy

The recent rise in the consumer price index (CPI) has stoked fears of 1970s-style high inflation and even stagflation, an economy that exhibits both high unemployment and inflation. While it would be irresponsible for policymakers to dismiss the possibility of either occurrence, it would be just as imprudent to overreact to the recent increase in the CPI. Rather than panic, public officials should focus on long-term reforms that will help avoid this type of economic anxiety in the future.

The Laffer Curve: Past, Present, and Future

Toggle open close The story of how the Laffer Curve got its name begins with a 1978 article by Jude Wanniski in The Public Interest entitled, Taxes, Revenues, and the Laffer Curve. 1 As recounted by Wanniski (associate editor of The Wall Street Journal at the time), in December 1974, he had dinner with me (then professor at the University of Chicago), Donald Rumsfeld (Chief of Staff to President Gerald Ford), and Dick Cheney (Rumsfeld s deputy and my former classmate at Yale) at the Two Continents Restaurant at the Washington Hotel in Washington, D.C. While discussing President Ford s WIN (Whip Inflation Now) proposal for tax increases, I supposedly grabbed my napkin and a pen and sketched a curve on the napkin illustrating the trade-off between tax rates and tax revenues. Wanniski named the trade-off The Laffer Curve.

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