Although structural changes have occurred in the economy since the 1970s, including increased energy efficiency, this difference in the degree of pass-through from oil prices to general inflation can be explained, in my view, only by differences in the stability of inflation and inflation expectations.
Overall, it is reasonable to conclude that macro policy, particularly monetary policy, was the most important single reason for the poor economic performance experienced during the U.S. Great Inflation. Constrained discretion and inflation targeting I mentioned at the beginning of the talk that constrained discretion characterizes at least to some degree the policy approach of many of the major central banks around the world.