Paul Volcker

Paul Volcker was an American economist who chaired the Federal Reserve from 1979 to 1987. He is known for sharply raising interest rates to curb high inflation.

Volcker disinflation: The sharp decline in U.S. inflation during the early 1980s, driven by restrictive monetary policy. This is the defining outcome of Volcker’s campaign against inflation.
Federal funds rate: The interest rate banks charge one another for overnight loans of reserve balances. The Fed’s tightening pushed this benchmark rate to exceptionally high levels.
Great Inflation: The prolonged rise in U.S. inflation from the 1960s through the early 1980s. This was the persistent inflationary crisis Volcker inherited and sought to end.
Jimmy Carter: The 39th president of the United States, serving from 1977 to 1981. Carter appointed Volcker Federal Reserve chair in 1979.
Phillips curve: A proposed relationship between inflation and unemployment in which lower unemployment can accompany higher inflation. Volcker accepted severe short-run unemployment rather than preserve a presumed inflation-employment tradeoff.
Early 1980s recession: A severe U.S. economic downturn in 1981–1982, marked by high unemployment and contraction. The tight monetary policy associated with Volcker helped trigger this recession.
Monetarism: An economic theory emphasizing the role of money supply in determining price levels and economic activity. Volcker-era policy drew on monetary aggregates as guides to restraining inflation.
Arthur Burns: An American economist who chaired the Federal Reserve from 1970 to 1978. Burns’s tenure preceded Volcker’s and became associated with difficulty controlling inflation.
Ronald Reagan: The 40th president of the United States, serving from 1981 to 1989. Reagan’s administration initially tolerated Volcker’s restrictive policy despite its economic costs.
Incomes policy: Government measures that directly influence wages and prices to restrain inflation. This approach offered an alternative to Volcker’s reliance on monetary restraint.

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