The paper "Federal Reserve - Reagan Administration " is a perfect example of a business article. The decade of the 1980s was one of the most favourable in the twentieth century for securities markets. The stock market had an average annual total return of 17.5%, as Standard & Poor's Composite Stock Price Index (the S& P 500) rose from 108 to 353. This was the second-best decadal return since 1929--only bettered by the 19.3% return of the 1950s when the world was recovering from the Depression and World War II.
Long-term government bonds had the best annual returns since 1929 (12.6%) as ten-year treasury rates declined from 10.4% to 7.8%. Real returns were equally impressive (Yergin, 1991). The 1970s were plagued by repeated crises over oil prices, inflation, and the dollar. In the last half of the 1970s, the Carter administration's efforts to deal with these problems were erratic and unsuccessful. There were financial crises in 1978, October 1979, early 1980, and yet another crisis was building in late 1980 as President Carter left office. The administration's emphasis on wage and price controls and energy regulation, and the Federal Reserve's weak application of monetary policy prior to October 1979 and its erratic application in 1980, rendered the prospect for steady economic growth poor and the securities markets subject to constant outside shocks (Greider, 1987). The election of President Reagan introduced a new regime in more ways than one.
There was a dramatic reduction in personal income taxes and a tripling of the federal deficit as a share of gross national product (GNP) from 2% to 6%. There was a shift to free-market policies that did away with wage and price controls and intervention in the energy markets.
And there were 180-degree changes in the trends of the dollar, oil, other commodities prices, and inflation generally, and a complete revision of antitrust policies. Most important, monetary policy under the aegis of Paul Volcker, strongly supported by President Reagan, was firmly established as the tool for suppressing inflation (Volcker, & Gyohten, 1992).
Daniel Yergin, The Prize, New York: Simon & Schuster, 1991, p. 694.
Ibbotson Associates, Stocks Bonds Bills and Inflation 1989 Yearbook, Chicago, Ill.: Ibbotson Associates, 1989. pp. 201, 207.
Paul Volcker, and Toyoo Gyohten, Changing Fortunes, New York: Times Books, 1992, pp. 166-168.
Thomas J. Sargent, "The Ends of Four Big Inflations," in Robert E. Hall (ed.), Inflation: Causes and Effects, Chicago: University of Chicago Press, 1983; and Robert E. Lucas, "Econometric Policy Evaluation: A Critique," in Studies in Business Cycle Theory, Cambridge, Mass.: M.I.T. Press, 1981.
William Greider, Secrets Of The Temple. New York, NY; A Touchstone Book, Published by Simon & Schuster Inc.: 1987