The Public Interest

The Mundell-Laffer Hypothesis— a new view of the world economy

Jude Wanniski

Spring 1975

THE United States has been passing through an economic nightmare. It seems like just the other day-and it was-that American economists of the first rank spoke confidently of “fine-tuning” the economy to assure a predetermined rate of economic growth within acceptable bounds of inflation and unemployment. And even those in the profession who scoffed at the notion of such fine-tuning, those who argued it could not be done in the fashion prescribed by the New Economics, were prepared to assert that other strategies-usually pertaining to the supply of money-could be called into play to keep the United States on the magic path of non-inflationary growth.

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