The political economy of wage and price controls: evidence from the Nixon tapes

Burton Abrams and James Butkiewicz

No 16-08, Working Papers from University of Delaware, Department of Economics

Abstract: In late July, 1971, Nixon reiterated his adamant opposition to wage and price controls calling them a scheme to socialize America. Yet, less than a month later, in a stunning reversal, he imposed the first and only peacetime wage and price controls in U.S. history. The Nixon tapes, personal tape recordings made during the presidency of Richard Nixon, provide a unique body of evidence to investigate the motivations for Nixon’s stunning reversal. We uncover and report in this paper evidence that Nixon manipulated his New Economic Policy to help secure his reelection victory in 1972. He became convinced that wage and price controls were necessary to grab the headlines away from the defeatist abandonment of the Breton Woods Agreement and the closing of the U.S. gold window. Nixon understood the impact of his wage and price controls, but chose to trade off longer-term economic costs to the economy for his own short-term political gain.

Keywords: Wage and Price Controls; Political Business Cycle; Macroeconomic Policy (search for similar items in EconPapers)
JEL-codes: E3 E6 H30 N12 N42 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2016
New Economics Papers: this item is included in nep-his and nep-mac
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Related works:
Journal Article: The political economy of wage and price controls: evidence from the Nixon tapes (2017)
Working Paper: The Political Economy of Wage and Price Controls: Evidence from the Nixon Tapes (2007)
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