I agree that stagflations in 1973-1975 and 1979 were not caused by expansionary monetary policy during the previous decade. It simply does not appear true. It was real shocks that disrupted the supply of oil all around the world in 1973 and 1979. After the shock was gone in 1973, the unemployment rate fell.
Plus, if the oil shock had been truly the cause of high price of the 1970s, the inflation rate should have been brought down. However, it stayed high, instead. It had remained over 5% until the late 1982.
Compared to pre-1st-Oil-Crisis period and post-Volcker period, this was indeed the period of Great Inflation.
However, whether the 1970s was a stagflationary period is another question. Textbooks define a recessionary period as a period with actual output below potential output; an inflationary (or expansionary) period as a period with actual output over potential output. It seems the late 1960s and early 1970s fit an inflationary period and the mid and late 1970s fit a recessionary period.
Given that inflation rate stayed high after the first oil shock, is it really wrong to call 1973-1982 a stgflationary period?
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