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Summary and Appraisal
Published online by Cambridge University Press: 26 March 2020
Abstract
The domestic forecasts, which were finalised in the second week of May, make no allowance for the economic repercussions of the Falklands crisis, which have been small so far. The direct impact on total UK trade of the embargo on exports to Argentina will be negligible (see page 36). Although other effects, such as those working through a higher level of defence expenditure or the state of confidence in financial markets, are potentially of greater importance, these are impossible to predict at the time of writing.
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- Copyright © 1982 National Institute of Economic and Social Research
References
(1) See, for example, replies to a questionnaire sent to witnesses by the Treasury Select Committee on 24 April 1980. Professor Milton Friedman predicted that ‘only a modest reduction in output and employment will be a side effect of reducing inflation into single figures by 1982’. Professor Laidler suggested that a 1 per cent increase in unemployment sustained for a year would reduce inflation by 5 per cent. Others were less sanguine about the effects of unemployment on inflation; for example Professor Tobin reversed Laidler's estimate, suggesting that a five or six per cent increase in unemployment might be needed to get rid of 1 per cent of inflation. (Reports of the Treasury and Civil Service Com mittee Inquiry into Monetary Policy, HMSO, 1980-1.)