ABSTRACT
The OEeD report of the experts The influential OECD report of the mid-1970s, the so-called McCracken Report, correctly attributed the inflation of the late 1960s and early 1970s to a variety of causes.2 First, the prolonged prosperity of the 1950s and 1960s led to growing expectations and aspirations on the part of the labor force which increased the intensity of cost-push inflationary pressures. Second, the synchronization of booms in the various OECD economies in 1972-73 led to a rapid run-up of commodity prices which was further intensified by a speculative boom in these markets. Third, various shocks and errors of policy occurred during the early 1970s that added to the inflation, for example, the run-up of oil prices and the collapse of the Bretton Woods exchange rate regime. In the view of the OECD experts these causes underlying the acceleration of inflation rates were best interpreted as a number of unfavorable shocks occurring in a short period of time that were not likely to recur. Growth, price stability, and FE would resume following a program of gradual and carefully planned recovery according to this unfortunately incorrect prognosis.
