This article explores a hypothesis about the take-off in inflation in the early 1970s.
According to the expectations trap hypothesis, the Fed was driven to high money growth
by a fear of violating the expectations of high inflation that existed at the time. The authors
argue that this hypothesis is more compelling than the Phillips curve hypothesis, according
to which the Fed produced the high inflation as an unfortunate byproduct of a conscious
decision to jump start a weak economy.