Are Macroeconomic Problems Overhyped?
Hyperinflation and depression interested economists because they are extreme cases of common problems. In the United States, for example, the annual rates of unemployment ranged from 3.0% to 6.8% in the 1950s, from 3.5% to 6.7% in the 1960s, and from 4.8% to 8.3% in the 1970s. Similarly, the rate of inflation has sometimes been uncomfortably high. During the 1950s prices (as measured by the Consumer Price Index) rose by 23%, during the 1960s they increased by 31%, and during the 1970s they more than doubled, rising by 112%. Though these numbers are all small compared to what happened in the Great Inflation and the Great Depression, and also compared to what has happened in other countries in the past 50 years, they indicate the persistence of problems in economic performance of Western nations. Though news media emphasize macroeconomic problems, a strong case can be made that problems involving economic growth and development are far more important. Indeed, economics began when Adam Sm
