In the course of the 1960s “booming” US Federal Government expenditure, which was partly associated with the Vietnam War, led to a sustained period of strong growth in nominal aggregate demand. This, in turn, led to an increase in inflation in the United States.
Nevertheless, in my view, they are not large enough to alter the conclusion that the pace of innovation in information technology and other industries has raised underlying productivity growth to a rate faster than prevailed in the twenty-five years prior to the mid-1990s. Still, the productivity story is exceptionally complex.