I'm claiming Reaganomics hasn't anything to do with inflation.
Once a Fed Chairman is selected by the president he cannot be removed during his term. This is the principle of central bank independence. When the board decides that they will hike rates there isn't anything to stop them. They can be dismissed only after each their terms end (7 years, 4 years for the chairman and vice-chairman).
That inflation is mostly a monetary matter is a key lesson from the 70s and there is very convincing evidence especially from that period. Germany was restrained monetarily and performed much better than France, Britain or the US. (Highest inflation was 8%).
There are of course cases where fiscal policy has an indirect effect on inflation through monetary policy:
* Countries sometimes pressure CBs to lower rates to finance government deficits. This is a big problem in developing countries.
* Fixed exchange rate regimes.
* Intervening in the supply or demand of some significantly weighted component of the CPI ()
* The liquidity trap (not really known, this is really recent and not much data on it)
Once a Fed Chairman is selected by the president he cannot be removed during his term. This is the principle of central bank independence. When the board decides that they will hike rates there isn't anything to stop them. They can be dismissed only after each their terms end (7 years, 4 years for the chairman and vice-chairman).
That inflation is mostly a monetary matter is a key lesson from the 70s and there is very convincing evidence especially from that period. Germany was restrained monetarily and performed much better than France, Britain or the US. (Highest inflation was 8%).
There are of course cases where fiscal policy has an indirect effect on inflation through monetary policy:
* Countries sometimes pressure CBs to lower rates to finance government deficits. This is a big problem in developing countries. * Fixed exchange rate regimes. * Intervening in the supply or demand of some significantly weighted component of the CPI () * The liquidity trap (not really known, this is really recent and not much data on it)
This is a good resource for basic (short run) theory, Short-Run Fluctuations by David Romer: http://elsa.berkeley.edu/~dromer/papers/ISMP%20Text%20Graphs...