Spending and loose monetary policy cause inflation
The fiscal theory of the price level can deliver a reasonable explanation for UK inflation in the 1970s, new research from the Centre for Economic Policy Research posits.
The analysis shows that according to this theory inflation rises when the government greatly increases public spending without raising taxes while monetary policy is accommodative. The research finds that this theory explains UK inflation in the 1970s well as that in 1972 the UK government floated the pound while pursuing
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