37c(
A STUDY OF THE EFFECTIVENESS OF FOUR
COMPETING SCENARIOS IN EXPLAINING
THE CAUSES OF STAGFLATION
THESIS
Presented to the Graduate Council of the
North Texas State University in Partial
Fulfillment of the Requirements
For the Degree of
MASTER OF SCIENCE
by
Toni T . Hurlbut, B.S.
Denton, Texas
August, 1983
Hurlbut, Toni T., A Study of the Effectiveness of Four
Competing Scenarios In Explaining the Causes of Stagflation.
Master of Science (Interdisciplinary Studies), August, 1983,
59 pp., 10 tables, bibliography, 21 titles.
This study investigates the relationship between stag-
flation and price stability and full employment and four
economic scenarios and the economic condition.
The data used in the study were obtained from govern-
ment publications and were analyzed using hierarchical
multiple regression. The standard inferential apparatus
were employed.
Give independent variables were found to be significant
in explaining the causes of stagflation. These were:
absolute change in M1 , oil embargo of 1974, corporate pro-
fits, output per hour, and Iranian crisis of 1979.
In conclusion, the causes of economic instability do
not rest with one single theory or factor, but a combination
of several.
TABLE OF CONTENTS
PageLIST OF TABLES. .. . . . . . . . . . . . . . . iv
Chapter
I. INTRODUCTION. . . . . . . . . . . . ,, . . . . 1
Background and Significance ofthe Problem
Statement of the problemUsefulness of the StudyFour ScenariosStatement of the ]ypotheses
II. REVIEW OF RELATED LITERATURE . . . . . . . . . 16
Purposes to be Se:(ved by Reviewof Literature
Sources of Literature Review
III. PROCEDURES.....-.... . . . . . . . . . . . . 27
Research TypeModel Specificatic nMeasurement and Variables
Employed in l4he Study
IV. FINDINGS. . .-............... . . . . 34
V. SUMMARY, CONCLUSIONS, INFERENCES,AND RECOMMENDATIONS. . . . . . . . . . . . . 40
SummaryConclusionsInferencesRecommendations
APPENDIX.. . . ...... . . . ........... 47
BIBLIOGRAPHY ...-.-...-........................... 58
iii
LIST OF TABLES
I. Summary of Hypotheses. . . ..-
II. Model I. .. . .. .. ..-.-.- -
IV. Model III. . . . . . . . . -
V. Multiple Regression Analysis ofModelI. . . . . . . ... -
VI. Multiple Regression Analysis ofModel1II . . . . . . . . .6..-.
VII. Multiple Regression Analysis ofModel III... . . . . . -0 .
VIII. Preliminary Data for DependentVariables. . . . ...... .
IX. Nominal Coding of DependentVariables.. . . . . . .....
X. Adjusted Data for IndependentVariables. ..9 .* .0. - -. -
Page- . 9 9 - - - 12
9 9 . 27
* , 9 . , . . 28
- - - s - -S. 29
r 0 0 0 S S
- - . , . .S .
- - -r , . - ."
35
37
38
. - - - - - 48
- - - - - - - 51
r - -r -" -s - -e 54
ivgloom I'll I I IN
The present study is a report of part of the results
of a joint project worked on by Joan O'Brian and Toni
Hurlbut. Therefore, portions of both papers are identical.
V
CHAPTER I
INTRODUCTION
Background and Significance of the Problem
Economic growth is extremely important to Americans
because this is a system in which everyone wants more. The
only condition under which all can realize their wants is
one of growth. Society, however, is currently a zero-sum
game in which the economy is stagnant. Capitalism cannot
survive continued stagnation. There must be economic
growth if human potential is to be realized. The economy
must continually create enough jobs to absorb all who want
to enter the labor market; otherwise great social dis-
harmony may occur.
There is a negative relationship between the growth
of real GNP and the unemployment rate. On the average, for
every 1 percent rise in unemployment above 5 percent, 2
percent of productivity is lost. If, therefore, the
unemployment rate is at 10 percent, as it has been in the
last two years, that means that 10 percent of the potential
output is lost. In addition, the social costs of unemploy-
ment are great. These costs include higher rates of
crime, mental illness, auto accidents, child abuse, alco-
holism, and divorce.
1
2
A recession is a condition in which unemployment
exceeds 5 percent and real GNP declines for two straight
quarters. :Recessions take great tolls in the form of
wasted productive resources and the long-term costs of the
slowdown of economic growth. Once lost, the skill and
productivity of wasted production resources can never be
recovered. As previously mentioned, the social costs of
recession are immense. Men and women lose their sense of
basic worth. They are unable to support their families,
farms and homes are lost, and businesses fail. There
also is a heavy cost to the government during recessions
in the form of less incoming revenues. Consequently,
the government is less able to perform the function of
providing financial aid to those in need at a time when
help is most necessary. Political and social disharmony
is another possible result of recession because of the
unrest of those out of work who cannot find suitable
employment.
Inflation is defined as unemployment at less than 4.5
percent, real GNP increasing at least by 4 percent, and
prices increasing above 2.5 percent per year. Inflation
hurts those most who have the least control over their
incomes. In an inflationary period, the amount of money
that one has to spend stays about the same while prices
increase rapidly. Inflation pushes wage earners into
3
higher and higher tax brackets, resulting in less dis-
posable income. Those who can afford to invest in land
and goods are likely to stay ahead of price increases,
since the value of their goods and properties also become
inflated. International trade is also negatively affected
by inflation. What foreign consumer or business would
invest in inflated American goods when these can be
purchased cheaper elsewhere? If inflation hits world-
wide, a collapse of world trade could result. Finally,
uncontrolled inflation can lead to political instability,
a situation which makes a country ripe for a dictatorship.
America's economic problem became one of stagflation
in the first quarter of 1973 through the first quarter of
1975 and again in the first quarter of 1981 through the
fourth quarter of 1981. Stagflation, a combination of
both recession and inflation, contains the ills of both.
It is defined as prices rising at above 3 percent, falling
real GNP for two straight quarters, and rising unemploy-
ment. Economists have theories as to ways to combat
recession and inflation singly, but when the two are com-
bined, the problem is more complicated. Attacking in-
flation makes recession worse and vice versa. Because
stagflation is a relatively new experience, there is also
no agreement among economists as to its causes. This
study will address four competing scenarios concerning
4
concerning stagflation and its causes. By evaluating each
scenario, the author will attempt to identify variables
which interact with elements of the economy in such a way
as to exacerbate economic instability and, in particular,
stagflation.
Statement of the Problem
Does a relationship exist between certain economic
scenarios in explaining the state of the economy in rela"-
tion to stagflation and full employment and price sta-
bility?
Usefulness of the Study
It is hoped that this study will help economists
and government leaders make more intelligent economic
decisions based upon knowledge rather than conjecture.
There are significant controversies relating to funda-
mental causes of economic instability. This study will
focus on those time periods which include price stability
and full employment, stagflation decline, and stagflation
recovery. These theories, however, can be applied to
other periods of economic instability--such as periods
of recession and inflation.
5
Theoretical Model or Postulates
Stagflation Scenarios
Conventional explanations for stagflation have proved
inadequate, since analysis of classical inflation and
classical recession primarily involves a study of aggregate
demand. Orthodox monetary and fiscal policies aimed at
correcting inflation or recession have not worked during
stagflation because the policies aimed at correcting one
stiuation exacerbate the problems of the other. Economists
have had to devise new theories as to the causes of this
economic phenomenon. These following scenarios offer
widely different views on stagflation, each representing
major problems in today's economy.
Monetarist scenario.--Monetarists believe that econ-
omic instability is caused by changes in the money supply.
They place the blame for stagflation on the monetary
policies of the Federal Reserve Board. The Fed controls
the growth of the money supply, and their inept policies,
along with the ill-advised executive branch actions, cause
economic instability. That there is a time lag between
increases or reductions in the supply of money and changes
in output and prices is an agreed-upon view of monetarists.
Traditionally, the method to combat recession has
been to increase the money supply. As the money supply
j..- -ko i64- . r '. Ji.:- .a<yL{., .,,,,,- ,. It 1 11 - .t'-:ii.,- , ,+. i---, -l.*Fv4wdM6a:..+v.l'.y ,44*j -_.
6
increases, there is no immediate visible effect on output
and employment, since there is a six-to-nine-month lag:
before the increase in the money supply has an impact.
Instead of waiting out the time necessary before changes
become apparent, the Federal Reserve Board, seeing no
immediate change, again increases the money supply. The
economy begins to respond to the initial increase in the
money supply, and productivity and employment rise. The
economy is in a recovery phase when the second increase
in the money supply occurs. The second increase pushes
the economy into inflation through higher prices.
Now the Fed is faced with a new problem, one of rising
prices. The conventional solution to this problem of
rising prices is to start reducing the money supply. When
the Federal Reserve Board does not immediately see the
desired results of a lowered money supply, another re-
duction takes place. As before, after a six-to-nine-
months lag, the first impact of the reduced money supply
will be on output and employment rather than on prices.
So in this period there are falling output and employment
along with continuing high prices. Then a second money
reduction hits, and the economy is now in a period of
stagflation, which is high unemployment and a high price
level.
7
With each fluctuation in, the money supply, the Fed
has only compounded the problem. As always, the Federal
Reserve Board was not willing to wait patiently until the
change in the money supply has had enough time to take
effect. Instead, they invariably reverse their policies
based on an initial impact rather than on the changes that
patience and the time lag would bring. In such a situ-
ation, the economy inevitably is now on a continuing
upward spiral of higher prices and higher unemployment.
The monetarists believe this vicious process can be
remedied by dampening the inflation. To do this, a
decrease in the growth of the money supply is called for.
This decrease will produce a recession which, in turn,
will increase unemployment by up to 8 to 10 percent. The
unemployed would have to be protected by some form of
better unemployment compensation so that they will not
bear the total burden of the inflation battle. After
sixteen to twenty-four months following the decrease in
the money supply, inflation will be under control, with
prices increasing at no more than 1 to 2 percent a year.
The Fed could then slowly begin to increase the money
supply at rates not exceeding the growth capacity of the
system, about 4 percent annually (1,2).
8
Power scenario.--The second scenario, the power
scenario, places the blame for the dilemma of stagflation
on the concentration of economic power in the large cor-
porations and labor unions. According to this scenario,
stagflation is always preceded by inflation which is
caused by too much spending. However, economic power
intervenes when government tries its classical remedial
actions to slow inflation by reducing spending. What
happens typically is that large corporations raise prices
because powerful labor unions demand wage raises; this
action, of course, increases production costs. The large
corporations can pass this increase on to consumers by
increasing prices through decreasing output, even though
there is falling demand for their goods. The large
businesses can get by with this because of their monop-
olistic power over the market.
To counter the stagflation resulting from these uses
of power, advocates of the power scenario believe that
government should impose legally sanctioned wage--price
guidelines. In this way, powerful business and labor
elements would be prevented from interfering with remedial
government actions to control economic instability (l;2).
Structuralist scenario.--In the third scenario, the
structuralists emphasize unemployment as the major cause
9
of economic instability. They espouse the viewpoint that
a 4.5 percent definition of full employment is inaccurate.
They maintain instead that a 7.5 percent unemployment rate
should be defined as full employment. This statistic is
based on their belief that 3 percent of the labor force
consists of workers with marginal skills, i.e., those
workers who do not possess the skills necessary to gain
employment in an increasingly technical market and those
workers who are functionally illiterate.
The structuralists maintain that, when unemployment
reaches 7.5 percent or higher, the government mistakes
this condition for a recession and implements policies
to increase employment. As a result, output increases
only slightly, and the economy seems to be in a period
of stagflation. This is not so, say the structuralists.
They believe that the problem is either inflation or
recession. To remedy this misnamed condition of stag-
flation, structuralists call for a redefining of the
unemployment statistic, decreased government spending,
and the creation of government jobs for those who lack
marketable skills (1;2).
Micro scenario.--The fourth scenario, the micro or
supply side scenario, advocates the explanation that
stagflation is caused, in part, by real shortages in
10
supply (output). These shortages occur in areas of out-
put which are essential and have multiplier impacts on
costs of producing other basic goods and services. An
example would be the belief that one cause of stagflation
is the reduction in petroleum supplies by OPEC, the
oil producing monopoly. Petroleum is an essential resource
since it is involved in the production of so many other
necessary goods and services. Another contributing factor
to stagflation, according to the micro scenario, is
excessive government regulation. Examples are the
Environmental Protection Agency, the Occupational Safety
and Health Administration, and the Department of Energy.
Advocates of the micro scenario also believe that import
restrictions and tariffs increase inefficiency in domestic
industries and thereby restrict aggregate supply. The
belief that excessive rates of taxation reduce incentives
and, thus, supply is another contention of the proponents
of the micro scenario. They believe the appropriate
policies to combat stagflation are the following: removal
of government regulation, encouragement of free trade,
decontrol of gasoline and natural gas prices to encourage
domestic production, and selective tax cuts to build
incentives and encourage output (.1;2).
11
Statement of the Hypotheses
The hypotheses are summarized in the table which
follows. The signs in the table are the hypothesized
signs of the model regression coefficients.
Under price stability and full employment (Y1),
there will be an absolute positive change in M1 (X1 )
which will move the economy away from stability because
at full employment an increase in M1 would be inflationary.
An increase in absolute change in the labor force (X2)
would be helpful in keeping the economy stable because
employment of workers is needed if there is to be con-
tinued gorwth in GNP. A positive absolute change in
corporate profits (X3) would also be positive in keeping
the economy stable because these profits are needed for
future growth in the corporations and, consequently, the
economy. A positive change or increase in output per
hour (X4) would contribute to keeping the economy stable
and growing. A positive change in compensation per hour
(X5 ) would move the economy away from stability because
an increase in hourly wages would take away from corporate
profits and would also be inflationary (drive up prices
as corporations tried to make up losses from extra wages
per hour). Both X6 --Oil Embargo, and X7 _--Iranian Crisis,
would have a negative effect on a stable economy. They
would create rising prices, less corporate profits, and
HH
H -H y0
H HW H'
rj 4-4rO 430 b~
rdU)
H
H 0H -H
41)H r(Nd
0t0
rO r
rc >q4 o c
En(T
-Hl -HO)0C)
0 tn0Z |4
o V
0 0 c
to o
-H .. \
-H to0) -
U)
0-)
4-p(Ti
HOO 0U)M
0
t P-el 0 e M
T c0 0 -H
00) 4-) JU
P4 (TI (3 O 3-
,.c 0 .0 -H
oo 00 -H
LC)
12
to
0-H41
rO
C)
'H0
I r
0
0
COH
0
. + C' I + + +
C" + C I + + +
1 + + + 1 1 1
E-U)H0
H Pa
E- vH
0)
-Hl(TI
13
higher unemployment since businesses could not continue
to operate under oil shortages and prohibitive oil prices.
Consequently, stagflation would ensue.
Under Stagflation I (Y2) it is not clear what an
increase in Ml would mean. Since stagflation is a com-
bination of recession and inflation, the result of an
added money supply is questionable. This added money
would benefit a recession and exacerbate an inflation.
An increase in X2 --change in labor force, at a time when
companies were not at full production would only drive
stagflation higher, since added workers who cannot be
fully utilized would compound the problem. A positive
increase in corporate profits (X 3 ) during stagflation
would, according to the power scenario, indicate an
unadjusted rise in prices; this would push stagflation
higher. According to the micro scenario, it could mean
more money for investment and new machinery and, conse-
quently, be a healthy step toward stability and away from
stagflation.
A positive change in output per hour (X4) would help
to move the economy back to stability and away from stag-
flation. An increase in compensation per hour (X5)
would be inflationary and, consequently, contribute to
continued stagflation. Both the oil embargo (X6) and
14
the Iranian Crisis (X7 ) would be destabilizing factors
and therefore help to continue stagflation.
The same holds true for stagflation I and for stag-
flation II.
CHAPTER BIBLIOGRAPHY
1. Abernathy, L. M., William A. Luker, and Sue White,"Instability; Ups and Downs of a Market Economy,"It. Works, North Texas State University, Denton,Texas, 1975.
2. Luker, William A. and Geneva Wimberly, Hard Choices,Manchaca, Texas, Sterling Swift, 1981.
15
---------- 7- 7-
CHAPTER II
REVIEW OF RELATED LITERATURE
Purposes to Be Served by Review of Literature
This study replicates one by Richard J. Covington,
"A Study of Three Competing Scenarios on the Causes of
Stagflation." In his study Covington concluded:
First, since the variables were successful inclassifying different phases of the economy,they are significant factors in the behaviorof the economy. Second, since these variablesrepresent scenarios suggesting problems inthe United States economy and since theyconform to these scenarios, then they suggesta need for ameliorative actions with respectto each. Third, because of the prominence ofthe variables representing the power andstructural scenarios during Stagflation I andII, the most powerful explanation of stagfla-tion as a result of the -study would includeelements of both the power and structuralscenarios (1, p. 29).
The Covington study, a multiple discriminate analysis,
"was designed to determine if variables representing the
three scenarios vary significantly during different phases
of the economy" (I, p. 29).
Covington divided the years from 1966 through 1977
into different phases, using the following criteria vari-
ables based on quarterly data:
16
AIN0144011WAN-44M AKMWA
17
1. average rates of unemployment
2. changes in the consumer price index
3. real gross national product
These phases or periods were as follows:
1. Full employment and price stability and pricestability--first quarter, 1966, through fourthquarter, 1967-
2. Classical inflation--first quarter, 1986, throughfourth quarter, 1979
3. Classical recession--first quarter, 1970, throughfourth quarter, 1970
4. Classical recession recovery--first quarter,1971, through fourth quarter, 1972
5. Stagflation I--first quarter, 1973, throughfirst quarter, 1975
6. Stagflation II--second quarter, 1975, through
fourth quarter, 1977
Covington selected the variable Ml, changes in the
supply of money, to represent the monetarists' scenario.
Hourly compensation in the private business sector, output
per hour of all persons in the private business sector,
and corporate profits after taxes were the variables
representing the power scenario. The structuralists'
scenario was represented by the variables unemployment
rates of black teenagers and changes in the size of the
civilian labor force.
Although the primary purpose of this study is to
replicate Covington's research, it focuses on the following
periods:
18
1. Full employment and price stability--firstquarter, 1966, through fourth quarter, 1967
2. Stagflation I (decline)--first quarter, 1973,through first quarter, 1973, and first quarter,1981, through fourth quarter, 1981
3. Stagflation III (recovery)--second quarter,1973, through fourth quarter, 1980
This study used Covington's variables with the
exception of black, teenage unemployment rate, since
the total unemployment rate was used as a criteria vari-
able in determining the periods. Two additional variables
were added: the oil embargo of 1974 and the Iranian
crisis which occured during the fourth quarter, 1979.
Next a five-year period from 1978 through 1982 was added.
Finally, a different regression analysis, a step wise
regression was used to test the study's hypothesis.
It is hoped that by these additions to and repli-
cation of Covington's study will add to the body of know-
ledge needed in order that necessary amelioriative measures
can be taken which will help to stabilize the economy.
Sources of Literature Review
The scenarios previously described are supported by
different schools of economic thought. The monetarists
believe fluctuations in the growth of the money supply
lead to inflation and/or recession. The nation's leading
conservative economist, Milton Friedman, is perhaps the
19
most prolific of the monetarists. In Free to Choose:
A Personal Statement, Friedman says,
Five simple truths embody what we know aboutinflation.
1. Inflation is a monetary phenomenon arisingfrom a more rapid increase in the quantityof money than in output.
2. In today's world government determines,orcan determine--the quantity of money.
3. There is only one cure for inflation: aslower rate of increase in the quantity ofmoney.
4. It takes time--measured in years, not months-for inflation to develop; it takes time forinflation to be cured.
5. Unpleasant side effects of the cure areunavoidable (3, p. 282).
He further states,
The cure for inflation is simple to state buthard to implement. Just as an excessive in-crease in the quantity of money is the one andonly important cause of inflation, so a reduc-tion in the rate of monetary growth is the oneand only cure for inflation. . . . Governmentmust increase the quantity of money less rapidly.The problem is to have the political will to takethe measures necessary. Once the inflationarydisease is in an advanced state, the cure takesa long time and has painful side effects (3, p. 270).
In his book Dollars and Deficits, Friedman reiterates
the importance of monetary policy. He states that "infla-
tion is always and everywhere a monetary phenomenon,
produced in the first instance by an unduly rapid growth
in the quantity of money . . ." (2, p. 18). He asserts
20
that "the Fed' s erratic policy reflects also its failure
to allow for the delay between its actions and their
effect on the economy" (2, p. 167). He concludes that
"the Fed will continue to step too hard on the brake
until the recessionary effects are clear and unmistakable
and then will step too hard on the accelerator" (2, p. 167).
Another spokesman for the monetarists, Beryl Sprinkle,
in his book Money and Markets writes that "various studies
have demonstrated that changes in money are associated
with changes in the economy in a causal manner" (12, p. 278).
Sprinkle seems to agree with Friedman on the causes of
inflation when he writes, "excessive money growth, in the
view of the monetarist, has accounted for all known sizable
inflations, domestic and foreign, modern and ancient"
(12, p. 278). Sprinkle lays the blame for inflation on
the Fed when he states, "the supply of the monetary base,
then, is substantially under the complete control of the
Federal Reserve" (12, p. 67). Sprinkle suggests reme-
diation when he says, "stable monetary growth in line with
output potential raises the welcome possibility of less
inflation and lower interest rates along with stable
economic growth and better corporate performance" (12, p. 280).
Therefore, the monetarists agree that the basic problem
with the economy is the erratic growth of the money supply,
time lags, and the policies of the Fed.
21
The power scenario views stagflation as the result
of the misuse of power in the hands of the large labor
unions and monopolistic corporations. In his book
Economics and the Public Purpose, John Kenneth Galbraith
speaks of the power of unions, "where unions do exist,
producers do not control prices. . . . wage increases
do shove up prices; an industry-wide wage increase
forces the employers, in effect, to agree on a price
increase" (4, p. 130). In another statement he speaks
of producers: "if producers have the power to raise
prices in response to wage claims and if the increase
depends on the amount of the claim, the firm is no
longer subordinate to the market" (4, p. 184). Galbraith's
solution to power in the hands of big business and labor
in his book Money, Whence It Came, Where It Went is
"direct wage and price control where there is market
power is inevitable. . . . Market power of strong
corporations and strong unions can create an inflationary
dynamic of its own" (5, p. 372).. Robert Lekachman also
advocates controls as a means to combat inflation and
recession when he says, "I also believe that permanent
controls over large enterprises, professional charges,
and major unions would, if equitably administered, keep
inflation be ow dangerous levels and avert recession"
(7, pp. 120-1 21).
22
Abba Lerner, author of Flation, advocates the idea
that "we would have to remove the power of the trade
unions to prevent wages from falling in spite of unemploy-
ment" (8, p. 21).
According to Richard Covington, proponents of the
power scenario seem to agree that there has been "a break-
down in the competitive market with wages and prices no
longer responsive to supply and demand" (1, p. 10).
Unemployment as the main cause of economic instability
is the primary emphasis of the structuralists. In Labor
Theory Richard Pearlman asserts that "structuralists do
claim . . . as full employment is approached . . . the
economy strengthens, structural employment appears, and
reduction in these structural elements is associated with
inflation" (11, o. 189). Discussing the structuralists
in Hard Choices, the Lukers state that the structuralists
"believe that the 4.5 percent definition for full employ-
ment has been inaccurately specified. They maintain
that full employment is, in reality, a condition where
about 7.5 percent of the work force is unemployed"
(9, p. 218). This is based on the structuralists'
belief that workers with marginal skills make up 3
percent of the unemployed (9). Marshall and Goodwin
in their book, Cooperatives and Rural Poverty in the
South, discuss the movement of unemployed blacks from
23
the rural south into the labor market and cite the "poor
match between the qualifications of displaced farm labor
and the requirements of the South's growth industries"
(10, p. 11). So it seems, according to the structuralists,
only a redefining of the labor statistic, taking into
account the marginal unemployed, will bring about a more
stable, less inflationary economy.
Lester Thurow supports the fourth scenario, the
micro or supply-side scenario, when states in his book
The Zero-Sum Society that
Nowhere is the nature of our fundamental dilemmamore clearly illustrated than in energy. Highprices, shortages, and supply disruptions areserious. They threaten future growth in ourstandard of living and are the main drivingforce behind an accelerating rate of inflation.. . . Our inability to solve the energy problemcontributes to making the inflation problemmuch worse, since energy is used in the productionand distribution of almost everything. Risingenergy prices cause price increases in othergoods and services. Wage earners attempt tokeep up with prices by demanding large wage in-creases. This leads to even greater inflation(13, pp. 24, 41).
Thurow addresses the contribution of excessive government
regulations to inflation when he states,
Deregulation could force prices down in truckingand many other industries. . . . There are ahost of government programs designed to raiseprices that could be abandoned. . . . Abandoningany or all of these programs would substantiallyreduce the rate of inflation (13, p. 69).
H
24
In his book The Way the World Works, Jude Wanniski
writes of the reduction of incentives under progressive
taxation, and he states that taxes of the progressive
ad valorem nature have led to "simultaneous inflation
and contraction--'stagflation'" (14, p. 115). George
Gilder in his book Wealth and Poverty states that
"there is no question that such marginal tax rates.
have a substantial negative impact on taxable economic
activity, work, effort, and productivity" (6, p. 187).
Gilder advocates an end to governmental confiscatory
tax practices.
Again spokesman for each school of economic thought
hold forth their views as the most relevant and meaningful
answers to the problems of economic instability in the
country today.
CHAPTER BIBLIOGRAPHY
1. Covington, Richard J., "A Study of Three CompetingScenarios on the Causes of Stagflation, " un-published problem in lieu of thesis, Depart-ment of Applied Economics, North Texas StateUniversity, Denton, Texas, 1980.
2. Friedman, Milton, Dollars and Deficits, EnglewoodCliffs, New Jersey, Prentice-Hall, Inc.,1968.
3. and Rose, Free to Choose, NewYork, Harcourt Brace Jovanovich, 1980.
4. Galbraith, John Kenneth, Economics and the PublicPurpose, Boston, Houghton Mifflin Company,1973.
5. , Money, Whence It Came,
Where It Went, New York, Bantom, 1975.
6. Gilder, George, Wealth and Poverty, New York, BasicBooks, Inc., 1981.
7. Lekachman, Robert, Inflation, New York, Random House,1973.
8. Lerner, Abba P., Flation, Baltimore, Penguin Books,Inc., 1973.
9. Luker, William A., and Geneva Wimberly, HardChoices, Manchaca, Texas, Sterling Swift,1981.
10. Marshall, Ray and Leonard Godwin, Cooperatives andRural Poverty in the South, Baltimore, TheJohns Hopkins Press, 1971.
11. Pearlman, Richard, Labor Theory, New York, JohnWiley and Sons, Inc., 1969.
12. Sprinkel, Beryl W., Money and Markets: A Monetarists'View, Homewood, Illinois, Richard D. Irwin,Inc., 1971
26
13. Thurow, Lester C. , The Zero-Sum Society, New York,Penguin Books, 1981.
14. Wanniski, Jude, The Way the World Works, New York,Simon and Schuster, 1978.
CHAPTER III
PROCEDURES
Research Type
The research for this study's data was of an associ-
ational explanatory type. It involved a nonexperimental
test of the structural hypotheses.
The three models are specified as follows:
TABLE II
MODEL I
Dependent Variable Y = Full Employment and Price StabilityNominal I = Full Employment andPrice Stability, 0 = Non Full Employ-ment and Price Stability
Independent Type ofVariables Measurement
Absolute change in M . . . . . . . .. . .. Cardinal
X2 Absolute change in total labor force . . . Cardinal
X3 Absolute change in corporate profits . . . Cardinal
X4 % change in output per hour. . . . . . . . Cardinal
X5 % change in compensation per hour. . . . . Cardinal
X6 Oil embargo... . . . Nominal l=Post embargo0=Pre embargo
X7 Iranian crisis . . . . . . . . . . Nominal l=Post crisis0=Pre crisis
= f(X1 , X2 3 ; X4 ; X5 6 7
27
28
TABLE III
MODEL II
Dependent Variable Y2 = Stagflation I (decline)Nominal I = Stagflation I,0 = Non Stagflation I
Independent Type ofVariables Measurement
X Absolute change in.... . . . . . . . . . . Cardinal
X2 Absolute change in total labor force . . . Cardinal
X3 Absolute change in corporate profits . . . Cardinal
X4 % change in output per hour. . . . . . . . Cardinal
X5 % change in compensation per hour. . . . . Cardinal
X6 Oil embargo. . . . . . . . . . . . Nominal l=Post embargo0=Pre embargo
X7 Iranian crisis . . . . . . . . . . Nominal l=Post crisis0=Pre crisis
Y2 = f(X ; X2 ; X3 ; X4 ; X5 ; X6 ; X7 )
This was an associational research project, with
the basic design being a time series analysis using the
independent variables measured quarterly over the time
period from the second quarter, 1966, through the
fourth quarter, 1982. The independent variables that
were measured are as follows:
1. The absolute change in M
2. The absolute change in the total labor force,including armed forces
29
TABLE IV
MODEL III
Dependent Variable Y3= Stagflation II (recovery)Nominal 1 = Stagflation II,0 = Non Stagflation II
Independent Type ofVariables Measurement
X1 Absolute change in .1 . . . . . . . . . . . . Cardinal
X2 Absolute change in total labor force . . . . Cardinal
X3 Absolute change in corporate profits . . . . Cardinal
X4 % change in output per hour. . . . . . . . . Cardinal
X5 % change in compensation per hour . . . . . Cardinal
X6 Oil embargo. . . . . . . . . . . . .Nominal l=Post embargo60=Pre embargo
X7 Iranian crisis . . . . . . . . . . .Nominal l=Post crisisPre crisis
3= f(X1; X2 ; X3 ; X4 ; X5 ; X6 ; X7 )
3. The absolute change in corporate profitsbefore taxes
4. The percentage change in output per hourall employees
5. The percentage change in compensation perhour
6. The oil embargo of 1974
7. The Iranian crisis of 1979
Since this analysis was designed to determine the
effect that certain criteria variables, representing ithe
four scenarios (previously described), had on specified
b . :e. __
30
periods of the economy, the first step was to collect
data whereby the economy could be classified as being
in one of the three phases--full employment and price
stability, stagflation I, or stagflation II. The three
criteria variables employed in this classification, using
quarterly data obtained from Economic Indicators, were
average rates of unemployment, changes in the consumer
price index, and changes in the real gross national
product. From an examination of these variables, the
following time periods were derived:
1. Full employment and price stability--secondquarter, 1966, through fourth quarter, 1967.
2. Stagflation I--first quarter, 1973, throughfirst quarter, 1975, and first quarter, 1981,through fourth quarter, 1981,
3. Stagflation II--second quarter, 1975, throughfourth quarter, 1980.
Stagflation I and stagflation II have the same
characteristics, except that stagflation I was character-
ized by a falling or negative real GNP, whereas stag-
flation II was characterized by a rising real GNP.
Next, variables were selected to represent each of
the four scenarios. M1 , the money supply, was selected
to represent the monetarists' scenario, since that
scenario is based on the belief that changes in the rate
of growth of the money supply causes economic instability.
31
The power scenario is predicated on the theory that big
business and labor unions cause economic instability
through their misuse of power. Therefore, changes in
hourly compensation, changes in output per hour for all
employees in the private business sector, and absolute
changes in corporate profits before taxes were chosen
to represent that scenario.
Since the structuralists' scenario is tied to
questions pertaining to the classification or compu-
tation of the unemployment statistic and the labor force,
change in the size of the total labor force was the vari-
able selected to represent this scenario. The micro or
supply-side scenario relates to real shortages in the
supply of basic goods in areas of output which are
essential to the economy; therefore, the last two varia-
bles selected were the oil embargo of 1974 and the Iran-
ian crisis of 1979. The statistics on these seven
variables were obtained from Economic Indicators, Statis-
tical Abstract of the United States, and Monthly Labor
Review.
The raw data were converted from absolute values
to absolute change per quarter for M1 , the size of the
labor force, and corporate profits. Output per hour
and compensation per hour were converted to percent
32
change. The oil embargo of 1974 and the Iranian crisis
of 1979 were nominally coded. The data were analyzed
using hierarchical multiple regression in the form of:
Y=A +BX + B X . . . + B X + E. The standard1 P1 22 nn
inferential apparatus was employed.
CHAPTER BIBLIOGRAPHY
1. Economic Indicators, Washington, Government PrintingOffice, 1966-1983.
2. Elf Stepwise Regression, Alexandria, Virginia, TheWinchendon Group, 1983.
3. Monthly Labor Review, Washington, Government PrintingOffice, 1966-1983.
4. Statistical Abstract of the United States, Washington,Government Printing Office, 1966-1983.
33
-u Ifcks ~_ .. ik;i4 kj4wa.., .. :ya:. . + . r. ., ' :.. is^-i.":. , ,,, .1: ..
CHAPTER IV
FINDINGS
The data were analyzed using hierarchical multiple
regression in the form of: Y = A + B X + B2X22 .
+ B X + E. The standard inferential apparatus wasn n
employed.
Table V is an analysis of Model I. The dependent
variable in Model I was price stability and full employ--
ment. The F ratio for the overall model was 1.71, and
the degrees of freedom were 8 and 67, with P C.05. The
multiple R was .169.
The overall model was significant at the .05 level.
The individual variables which were significant were the
absolute change in M1 and the oil embargo of 1974. There
is a negative relationship between Ml and price stability
and full employment; therefore hypothesis 1, Model I
(see page 12) was sustained. There is also a negative
relationship between the oil embargo of 1974 and price
stability and full employment; therefore hypothesis 6,
Model I (see page 12), also was sustained. The other
Model I hypotheses were rejected.
34
Lt)00co)
r-|
HH-i0
C)
-Jo
H toO D
. OH 0
O C
Cd
r1~
H t
O #
-H 0
Cd
w r-p0H C
0
O
041P rd0 -1-
H O
O Hr4Cd
0-
H (O
O
r-pN r00
tH
Q- H
rde
H 0
LtC()
Cl
Cl
Cv)
HC
N
C
r-
CN
Cl
o
UH
H H
00
H CI
U)
W p
0 mHP4N 1H
H
C CCO Q
C
0 0 Q4-4
c 0 0-:C ow
..i f r
00
Cl
IC)
N
C4
0 (1
0
-Pc
N
NI I
Cc
He
CC
H
Clo
C'
HP"r1H
NCO
."
o enco el
. I
00C
C,-0
co
CCl
0I 0
0- rd "I0 Cd0 -H.J ( mf r
N 4.4
35
Lr(1
H
."
HC
00C)
N
0o
lfC
C 0
H
H
N
M0
N
C
Q
O
.
MM
N.
M
0
C
N
.Td
-H
to
C H
HUO
N
IC"
N
rd
ZH
HtQII
Nl 0N Zrz.,
.s... .. ... afl ,... gum 5W 5 ti W;,_-.,j * :;r. vw.,..a: nAtst ' o- ,;., s. r .y w .- _., ;w }.,,
I
36
Table III is an analysis of Model II. The dependent
variable in Model II was stagflation I. The F ratio for
the overall model was 1.717, and the degrees of freedom
2were 8 and 67 with P(.05. The multiple R was .169.
The overall model was significant at the .05 level.
The individual variables which were significant were
corporate profits and output per hour. There is a nega-
tive relationship between corporate profits and stag-
flation I. The hypothesized relationship was indeter-
minant. There is also a negative relationship between
output per hour and stagflation I; therefore hypothesis
4, Model II (see page 12) was sustained. The other Model
II hypotheses were rejected.
Table IV is an analysis of Model III. The dependent
variable in Model III was stagflation II. The F ratio
for the overall model was 11.813, and the degrees of
freedom were 8 and 67 with P .05. The multiple R
was .584. The overall model was significant at the .05
level.
The individual variables which were significant were
corporate profits, the oil embargo of 1974, and the Iranian
crisis of 1979. There is a positive relationship between
corporate profits and stagflation II. The hypothesized
relationship was indeterminant. There is a positive
relationship between the oil embargo of 1974 and stagflation
a
N 0010 H)H- QH-i
HC)C)C)
ElU)
-HO-H 0
Cdr
-i
W
O
SdI
op
Hc
OH-i
cat
OP
H O
Or-I
U tr
k4d
OpM
HON r-I
004
H N
E
0Cd
'N r-
Q -H
,-d t
H
N
r1
CO1r-1 CD
r- s
H C)
C) C)
C) C
IC
C)
COC)CM
In10COC)
oC)N
C7
10
H-i
C)
C)C)
10
r-400
N0
N
Hs
Ntl
N N
C to
0"
COL
10
Nn
CO
CO
C)
H
In
r,""a
C)
CO
10
C0
00
COco00
H
In
C)0
10
C)
C)
C)H
tN N0 0
m
N
NNa
C)
10
to
H
C)
4-) 0 0Cdt12 I 0- 4-)O C t r a
M O 0 -H #1 0 i -- H ri00 Q %4 Q% QOgd Cd a ti),-~%0 P:14H d-
H . d0 0 -4Cd - -H-H-1 (d C O 10 0 O Nd O - I- M
fr fri > 1 fri frH
10
C)
V
rd
rd
00
N1 0
cIorI
37
C) C) C)C3 C)0 0
C)
OCC7
ZO
H H
0IH 1
.1 E-
rA H24
HO
A O
NC) H
C)
NN
-
C)H
r:pC)ClN
C)
CD CDC)
Q0C)C)
:0
.Q
"
r-I G)cO
.."1 N
r-I t?
E O
"r )
N )e d
~HSU
O
0 N
S0
14
OH
U 4
HOH N
HO
H
Sr-I
r d
H
H
co
r-HCld
C3
C)
Co
H
r-1
ClV
C)
Cl
1
010
4 4-) 4-) IQ o r i (
OO 0H44-4 00o 4J 4 G 4J
edO1 0 pa O QeMrL UN ON UO
C3
Co
C)Cap(Y)
Cl
Co
N
coC'"
H
CN
HH-Nl
00
s
ClCo
C)N
C
0
F +
0
0 0C)
NC)LC)
MCLIn
000
H
Crl
HHCl
0tn edO)S H-H
0rT HO
SN
38
HH
E-1
C -
m HH1 H
90
HZ E
H rF-
E4|
SH
H ci
E-PQ
F4O
H
"
M
r-1
C)C)
C)r
C)
N
NH0
C)
C)
C)
"
sr
Q
C)
C)C)
NQ
rd
T4, r-
IQc
Cl 0M
39
II; therefore hypothesis 6, Model III, was sustained.
There is a negative relationship between the Iranian crisis
of 1979 and stagflation II. Since a positive relation-
ship was hypothesized for this situation, this hypothesis
was not sustained. The other Model III hypotheses were
rejected.
CHAPTER V
SUMMARY, CONCLUSIONS, INFERENCES,
AND RECOMMENDATIONS
Summary
Two variables were significant in Model I (price
stability and full employment): the absolute change in
Ml and the oil embargo of 1974. Two variables were signi-
ficant in Model II (stagflation I): corporate profits
and output per hour. Three variables were significant in
Model III (stagflation II): corp rate profits, oil
embargo of 1974, and the Iranian risis of 1979.
Conclusi ns
Model
The fact that M had a negat
price stability and full employme:
the monetarists' theory that an a]
contributes to economic instabili
micro scenario view that shortage
to economic instability gains cre
cance of the negative relationshi
and full employment and the oil e:
40
lye relationship with
it in Model I supportsabsolute change in M
by. The supply side or
s in supply contribute
fence from the signifi-
p between price stability
nbargo of 1974 in Model I.
41
Model II
The negative relationship between the absolute change
in corporate profits and stagflation I in Model II does
not support the power scenario's theories, but it could
support the micro theories in that the economy would be
moving away from stagflation toward economic stability as
more money is available for new machinery and research
and development. However, the negative relationship
between changes in output per hour and stagflation I in
Model II could support the power scenario's contention
that the economic power in the hands of large corporations
and labor unions can contribute to economic instability.
Model III
The positive relationship between corporate profits
and stagflation II in Model III also contributes to the
power scenario's theory.
The micro or supply side scenario again gains credi-
bility from the positive relationship between stagflation
II and the oil embargo of 1974 in Model III. The fact
that there is a negative relationship between the Iranian
crisis of 1979 and stagflation II in Model III does not
support the micro theory, however.
Five variables representing three scenarios were
found to be significant. These variables are as follows:
, .. : :
42
1. Ml--X
(Monetarists' Scenario)
2. Corporate Profits--X3(Power Scenario)
3. Output Per Hour--X4(Power Scenario)
4. Oil Embargo--X6
(Micro Scenario)
5. Iranian Crisis--X(Micro Scenario)
These five variables are significant factors in the
behavior of the economy. M1 was significant during
periods of full employment and price stability, while the
remaining four variables were significant during stagfla-
tion I and stagflation II. This would tend to support the
theory that the most powerful explanation of stagflation
includes elements of both the power and the micro scenarios.
The fact that five variables from three scenarios were
significant leads to the conclusion that, given the limits
of measurement, a combination of these three scenarios
have to be in some way synthesized to produce a more
general theory to explain economic instability,
Inferences
M1 is significant only during periods of full employ-
ment and price stability, not during periods of stagflation
I and stagflation II. This could be caused by the fact
43
that, in an unstable economy, changes in the money supply
do not contribute so much to further instability. However,
when the economy is stable, more money pumped into the
system throws off the balance and sends the economy into
stagflation.
The structuralist scenario's contention that incor-
rectly defined unemployment is a cause of economic insta-
bility was not supported by any of the findings. Even
though it is true that the unemployment statistic needs
to be redefined, the redefinition may not contribute
greatly one way or another to economic instability.
Recommendations
Five variables from three scenarios were significant.
This suggests that the causes of economic instability do
not rest with one single theory or factor, but a com-
bination of several. One implication of this study is
that monetary and fiscal policies are not effective in
combating stagflation but, instead, only lead to economic
instability during an economically healthy period.
Since an interruption in the supply of a major
resource, such as oil, to the economy does contribute
to stagflation, more thought by the government could be
given to taking measures to help prevent future shortages
from occurring.
44
Corporate profits proved significant in both periods
of stagflation. Further research could be aimed at deter-
mining exactly what the economic significance is and what
ameliorative measures could be taken to prevent further
unhealthy effects of big business and labor unions.
In short, one of the most important problems facing
economists and those in positions of power is recognizing
what the real problems are in the economy and deciding how
best to combat these problems.
Suggestions for Further Research
The following recommendations for further research
using the same data are suggested.
The first recommendation is to factor analyze the
three variables which were used to create the states of
the economy--real gross national product, consumer price
index, and the unemployment rate--to produce one or two
general variables that would describe the performance of
the economy. Then a regression with the same set of
independent variables, used in this study, should be
run against the newly created orthogonal dependent
variables.
The data with which this study were concerned were
time series, and therefore, subject to confounding of
45
autocorrelation. Another approach would be to whiten
the series using Box-Jenkins techniques and produce the
same regression (1, 2) .
In this study the dependent variables are nominal
(1,0). A series of nonlinear transformations of the
independent variables might improve the power of the
models.
_ , ,
CHAPTER BIBLIOGRAPHY
1. Cook, Thomas D. and Donald T. Campbell, Quasi-Experi-mentation, Dallas, Texas, Houghton MifflinCo., 1979.
2. Ostrom, Charles W., Jr., Time Series Analysis, BeverlyHills, California, Sage PUblications, 1976.
46
APPENDIX
-ilfiill''W14"WillDI-FMW ri-t-4:MW itTrfA'Lellil "PN1111?'IP11'f4-"%Tiefreiveirrealgely Milp.1rfttil*W11&'rF10Iririger-olWkrIl-33i Irfr|It'fnriffilitilthRI-ig1Pil"Ttlilli-flF411|MW3|TF11F"girillllHirftff'PflF1|l#4195filrTilifflP'Nillilil-EllidfiertN1411tiriliflindillh1rfi106Tiltlifil-itli!.ilinilf'l'illeifrirennillilin:In11'Irsifr'rrrnIIIK1Fil'I ri" Tsal1InsFrir!11Psi-rPIII.1sumir9ni'sisWgtIllingm)IIIliggII:F1t-r1I"irftFIntililKem1TE4rmillirralti gir-g:fTroris2E91a eral.4%rir Ei:rtrm11strie:m
TABLE VIII
PRELIMINARY DATA FOR DEPENDENT VARIABLES
Year Quarter GNP Unemployment Rate CPI
1966 1 640.5 3.8 112.0
2 643.5 3.9 112.9
3 649.9 3.7 114.1
4 657.2 3.7 114.7
1967 1 660.7 3.7 115.0
2 664.7 3.9 116.0
3 672.0 4.1 117.1
4 679.6 3.7 118.2
1968 1 692.7 3.7 119.5
2 703.4 3.7 120.9
3 712.3 3.6 122.2
4 718.4 3.3 123.7
1969 1 723.1 3.4 125.6
2 726.7 3.4 127.6
3 730.6 3.8 129.3
4 729.8 3.5 131.3
1970 1 723.3 4.4 114.5
2 724.4 4.8 116.3
3 727.4 5.4 117.5
4 720.3 6.2 119.1
1971 1 729.7 6.0 119.8
2 735.8 5.8 121.53 740.7 6.0 122.2
4 751.3 6.0 123.1
1972 1234
766.5783.9796.1811.6
5.95.55.55.1
124.0125.0126.2127.3
48
49
TABLE VIII--Continued
Year Quarter GNP Unemployment Rate CPI
1973 1 829.3 5.0 129.82 834.3 4.8 132.43 841.6 4.7 135.54 844.6 4.8 138.5
1974 1 830.5 5.1 143.12 827.1 5.2 146.93 823.1 5.8 151.74 804.0 7.2 155.4
1975 1 1,158.6 8.5 157.82 1,168.1 8.7 160.63 1,201.5 8.6 163.64 1,215.9 8.3 166.3
1976 1 1,246.3 7.5 167.52 1,126.0 7.6 170.13 1,272.2 7.8 172.64 1,279.9 7.8 174.3
1977 1 1,311.0 7.4 178.22 1,330.7 7.1 181.83 1,347.4 6.8 184.0
4 1,360.7 6.4 186.1
1978 1 1,354.2 6.2 189.82 1,382.6 5.8 195.33 1,391.4 5.9 199.34 1,413.0 5.9 202.9
1979 1 1,430.6 5.7 209.12 1,422.3 5.7 216.63 1,433.3 5.8 233.44 1,440.7 5.9 229.9
1980 1234
1,501.91,463.31,471.91,486.5
6.27.77.57.5
239.8247.6251.7258.4
50
TABLE VIII--Continued
Year Quarter GNP Unemployment Rate CPI
1981 1 1,516.4 7.3 265.1
2 1,510.4 7.4 271.3
3 1,515.8 7.6 279.3
4 1,497.6 8.8 281.5
1982 1 1,470.7 8.9 283.1
2 1,478.4 9.4 290.6
3 1,481.1 10.1 293.3
4 1,471.7 10.7 292.4
Irenlig utmesismignis.
TABLE IX
NOMINAL CODING OF DEPENDENT VARIABLES
Y1YY
Full Employ- 2 3ment and Price Stag- Stag-
Year Quarter Stability flation I flation II
1966 2 1 0 0
3 1 0 0
4 1 0 0
1967 1 1 0 02 1 0 03 1 0 04 1 0 0
1968 1 0 0 02 0 0 03 0 0 04 0 0 0
1969 1 0 0 02 0 0 0
3 0 0 0
4 0 0 0
1970 1 0 0 0
2 0 0 03 0 0 04 0 0 0
1971 1 0 0 02 0 0 03 0 0 04 0 0 0
1972 I234
0000
0000
000
51
t x awa=.+w - _ _ _
52
TABLE IX--Continued
YlYl Y3
Full Employ- 2 3went and Price Stag- Stag-
Year Quarter Stability flation I flation II
1973 1 0 1 02 0 1 0
:3 0 1 04 0 1 0
1974 1 0 1 02 0 1 03 0 1 04 0 1 0
1975 1 0 1 02 0 0 1
3 0 0 14 0 0 1
1976 1 0 0.12 0 0 1
3 0 0 14 0 0 1
1977 1 0 0 12 0 0 13 0 0 1
4 0 0 1
1978 1 0 0 12 0 0 1
3 0 0 14 0 0 1
1979 1 0 0 1
2 0 0 13 0 0 1
4 0 0 1
1980 1234
0000
0000
I1I1
F+a.. w
53
TABLE IX--Continued
Full Employ- 1 3ment and Price Stag- Stag-
Year Quarter Stability flation I elation II
1981 l 0 0 02 0 0 03 0 0 0
4 0 0 0
1982 1 0 0 02 0 0 03 0 0 04 0 0 0
-C C
44H u
-d0
MCn
4-W0O
-i)s:: H
CHu
U)0
-H
1)
Cd
0'
Naa
000C
000
00
00
k00
.zH
H
0
rE-
0000 0000 1 0000
ooo0 I ooo
[ ' C O Y)CO
C0000
000 000
HLO
000U -H r
U 4-
O\O
4J 0
4JI UU)
0 HM U 4. -
TO -14L4
-HIF4 M 0 U)OO , r
11 LO O0C,
0N000r4C ?C
Cl C? )
HOOO
0)000
Cl H
H00 HC
. . .H .
HNClCO
Co
C'oH)
LO4 -10 -
H CCl00000 000 .
0000IIqC) ) C
C C D
0H
Lr) LO C)
101000H-O
C7
H
54
Cl
NC) co
H
* 0
k-04
Cl
Lf1nH
p:
Cl LO C
NOCN C
r Cl C Y) di
cr%*"
~r"'-H oH.
H 0
H- i H
)
i-7
n i 0- 4a)
U \
0 -H H
04 -dO 2-.-HM
0
0H f
-H
0)9
c H
C
-Hp
43
0)
55
0 o C o
NC o o
r- e r- -I
00C00
C)rIr-1,-Ca
Noo
0H
00 0 0 0
C, 000 o
0
-H
(NIH0
H-(NIHHOU
c00
L)
I
C\*(*IN N
HI 1
0 o00o
N r-t r-i -H
. . . .
Lr o N (YOHOH
* 0 0 *0
H
CoNc4m~
LO H O
0 0r-N
S LO LH
NC-I
r- r- r-4 N
0000
C ohm' r-1000C)H0C)
1 I
ooMM
' r-4L
r)
Nra'i
ccLOtCNO
cI (Nr- 00
r r r - r
N
H
MC%4r r
!I
i i i"( iL
( n V
H-
,
p*~- 4
o 0 0v\ ri C
o yCt
--- U
1
CN
-H-
4-HU 0
H
0
O d
W4 0
4 0 00U U H
"-H U)
12) 1 -~4z ::I
Cd 0
UN-H- Q
0
U) I U 0--
0 -r-4 U)
rte C - M
0 0 0
C3
0)
U -H
U)H)
m -H
cd
o0
t}
0000ci)
0 00 0. 0 000 oIo oo o
r- H r- H r-I I r-IHr-Ir-4r-4
I) M LC OH C CD '
LO co0 C.0 i) C)
00' 00m
mIco
I i I I
r- i C
N m
HC')
NNC')C'HC')C)0
C')'C0 e
r-00CiH
0000s 0 0 0M
C)00
CY C r-H
C'OHOQHQC)000
00HM
0 H 0N
00H
SL)
l4 CN1r-
I)
N3
r- i r- r-HHHH
C)HH)
r.C 0
CO H -ION
4 " ~ j4 I "
rr- -I
N0-c L0) N
H i<Q
m LOm LA
56
r0
4)
0
NH- r-i NI0000
H3 O HN
OO O OO
I I
r-l
rH
N i ni 0
M t 00L
57
-1 \
H H
(1) P4ct
04 4cd M
0 0 0 0(.\O fo O
-p L
ai Ici)
Cd 0
.U ~-Ho
0
o I o
O -r-44 -r4 0
td C 4- r- Ou U Cd0r-i 0
r-U)H
- I -
z0 0Qrd
U zed E--
,.i -r-t
I f
tYeto
-t
r--- r 4 r- -
3mNC
cmoococo
0000 *
*fo
o (N"meN
IC) 10(3-q0H d'3
Co
Co
00 m k.0-4 1
00~
H noo
r- r- r- r -
C Nr-i &
00 o c-
OOOH
0000
0001r0
0000o
till
H
r-
CHH--
omHN
kto O 1.0
(Ird
N
-:: 0%LO
" c r "Q-0 OLC)0r"-4
Nc'-
H
0
HHHr-
4-4w 0
r-1 r-I r-I r-
r- r- H r-I r
N N N NOOOo
0000
0N000
I I
r-103NM-I
NH)C
C.o
r-
OOL-O
COL L
I I
NO'
CM Gco
LO O CoN
r-q
i'-1 CV M -'c
H
HHH r-i
r-I c-i r-4 r-i
N) LC L
0 000
HOOH9
0000
CSIr-- I fl
SCOH
I C
0 03 l
H
Co1
rd
0-U
0000
r- 0NC) r-4
HOOH
I I
N
BIBLIOGRAPHY
Books
Cook, Thomas D. and Donald T. Campbell,' Quasi-Experimen-tation, Dallas, Texas, Houghton Mifflin Co., 1979.
Elf Stepwise Regression, Alexandria, Virginia, TheWinchendon Group, 1982.
Friedman, Milton, Dollars and Deficits, Englewood Cliffs,New Jersey, Prentice-Hall, Inc., 1968.
and Rose, Free to Choose, New York,Harcourt Brace Jovanovich, 1980.
Galbraith, John Kenneth, Economics and th Public Puris,Boston, Houghton Mifflin Co., 1973.
Money,Whencet.Came, Where ItWent, New York, Bantom, 1975.
Gilder, George, Wealth and Poverty, New York, Basic Books,Inc., 1981.
Lekachman, Robert, Inflation, New YOrk, Random House,1973.
Lerner, Abba P., Flation, Baltimore, Penguin Books, Inc.,1973.
Luker, William A. and Geneva Wimberly, Hard Choices,Manchaca, Texas, Sterling Swift, 1981.
Marshall, Ray and Leonard Godwin, Cooperatives and RuralPoverty in the South, Baltimore, The Johns HopkinsPress, 1971.
Ostrom, Charles W. , Jr. , Time Series. Analysis, BeverlyHills, Calfironia, Sage PUblications, 1976.
Pearlman, Richard, Labor Theory, New York, John Wileyand Sons, Inc., 1979.
Sprinkel, Beryl W. , Money . ct Mark AMonetaristsView, Homewood, Illinois, Richard D. Irwin, Inc.,1971.
58
59
Thurow, Lester C., The Zero-Sum Society, New York, Penguin
Books, 1981
Wanniski, Jude, The Way the World Works, New York, Simonand Schuster, 1978.
Articles
Abernathy, L. M., William A. Luker, and Sue White,"Instability; Ups and Downs of a Market Economy,"
It Works, North Texas State University, Denton,Texas, 1975.
Public Documents
Economic Indicators, Washington, United States GovernmentPrinting Office, 1966-1983.
Monthly Labor Review, Washington, United States Government
Printing Office, 1966-1983.
Statistical Abstract of the United-States. , Washington,United States Government Printing Office, 1966-
1983.
Unpublished Materials
Covington, Richard J., "A Study of Three Competing Scenarios
on the Causes of Stagflation," unpublished problemin lieu of thesis, Department of Applied Economics,
North Texas State University, Denton, Texas 1980.
Top Related