James R. Lothian

Michael R. Darby

English

Research Papers in Economics

This PDF is a selection from an out-of-print volume from the National Bureau
of Economic Research
Volume Title: The International Transmission of Inflation
Volume Author/Editor: Michael R. Darby, James R. Lothian and Arthur E.
Gandolfi, Anna J. Schwartz, Alan C. Stockman
Volume Publisher: University of Chicago Press
Volume ISBN: 0-226-13641-8
Volume URL: http://www.nber.org/books/darb83-1
Publication Date: 1983
Chapter Title: Preface
Chapter Author: Michael R. Darby, James R. Lothian
Chapter URL: http://www.nber.org/chapters/c6120
Chapter pages in book: (p. -3 - 0)Preface 
In the spring of 1975 the industrialized world was in the midst of its second 
consecutive year of double-digit inflation, for most countries the highest 
rates of price increase at any time during the post-World  War I1 period. 
Anna Schwartz and Michael Darby, dissatisfied with many of  the ex- 
planations then being advanced for this increase in inflation and with the 
dearth of hard empirical evidence to support them, decided to organize a 
project to study the international inflation process. At the time both were 
at the National Bureau of  Economic Research, then at its old location in 
New York. Darby, however, was slated to return to UCLA the coming 
fall. Two research teams were therefore to be formed: one based at the 
Bureau in New York, the other at UCLA. Jim Lothian joined the first 
effort; Ben Klein, the second. 
In autumn 1976, the project began; close to five years later it ended 
when the final draft of this volume was completed in spring 1981. During 
that interval, two important developments occurred in personnel. The 
composition of  the researchers in the group changed: Klein completed 
work on central bank reaction functions and decided to direct his re- 
search to other areas of economics; Alan Stockman, then at UCLA, took 
his place; and Arthur Gandolfi, of  Citibank, came on in New York. In 
addition, the graduate students who started out as research assistants on 
the project matured intellectually and went on to make their own inde- 
pendent contributions to research on the international inflation topic. 
Besides the papers by  Daniel Laskar, Dan Lee, and Mike Melvin, all 
derived  from  doctoral  dissertations  at  UCLA  and  included  in  this 
volume, the project gave rise to dissertations by four other individuals: 
John Price at UCLA, Anthony Cassese and Nurhan Helvacian at the 
Graduate  Center of  the  City University of  New  York,  and  Robert 
Greenfield at Rutgers University. We consider their successes no small 
xiii xiv  Preface 
part of  the benefits of  the project and take some pride of  our own in their 
accomplishments. 
As originally conceived, the project was to accomplish two goals: the 
construction of  a consistent and temporally comprehensive data base for 
the eight major industrial countries we wished to  study; and estimation of 
a theoretically sound simultaneous model that we could use to test and 
otherwise evaluate competing hypotheses about the genesis and spread of 
inflation internationally. 
The project accomplished both goals. The four chapters that describe 
the  work done in these areas, however, make up less than a quarter of  the 
volume. Excluding the introductory and concluding chapters, there are 
eleven additional chapters that complement the core of  the study, both in 
the range of issues covered and in the methods of investigation employed. 
Given this complementarity and the corroborative nature of much of  the 
resultant evidence we feel that the study is of considerably greater value 
than it would have been had we and our colleagues stuck to our original 
plan. We trust that the readers will therefore be better able to calibrate 
their own internal probability calculators when evaluating our conclu- 
sions. 
Before closing we wish to acknowledge those individuals and organiza- 
tions that in one way or another assisted the project. Were we to list all of 
them here, the litany would seem virtually endless. Many individuals, 
however, have already been cited both in the individual chapters and in 
the Data Appendix. 
The major source of  direct funding for the project was the National 
Science Foundation. Scaife Family Charitable Trust, the Alex C. Walker 
Educational and Charitable Foundation, and the Relm Foundation also 
generously supported our efforts.  In addition,  Citibank, N.A., in an 
arrangement that to our knowledge is unique, donated one day per week 
of  Lothian’s time for the full period of  the project’s life and one day a 
week of  Gandolfi’s time during the period of  his involvement. Leif H. 
Olsen, Harold van B. Cleveland, and Peter H. Crawford, who initiated 
and supported this arrangement, deserve special thanks. 
We also are grateful to our adivsory panel. The members of this panel 
at various times during the life of  the project were Sven Arndt, Michael 
Hamburger, Robert Heller, Donald Matthieson, Paul Craig Roberts, 
Guy Stevens, Henry Wallich, and Robert Weintraub. The role of  this 
group was to counsel us on the relevant questions to be investigated and 
to receive and comment critically on our interim results. The members of 
the  panel  have  performed  these  functions  exceedingly  well.  Their 
approval of, or concurrence in, our results or conclusions, however, 
ought not be supposed. Indeed some members of  the board have been 
frank in their sharp disagreement with certain of  our methods and in- 
ferences. xv  Preface 
We owe a special debt to the secretaries and research assistants who 
helped both of  us in the course of  our compiling various papers into a 
coherent whole  and seeing the final manuscript  through  publication. 
Donna Bettini in New York and Henrietta Reason and Carole Wilbur did 
excellent  jobs of  typing  a  particularly  difficult  manuscript.  Cornelia 
McCarthy did  and does provide excellent  research assistance in New 
York. Linda Dunn and Laura Nowak also were of  great assistance before 
going  into business  and completing  the  Ph.D. degree, respectively. 
Andrew A.  Vogel was a tower of strength in completing the Mark I11 and 
Mark IV estimations and simulations and is currently pursuing his doc- 
toral studies. M. Holly Crawford did much of  the preliminary work on 
these models before being lured away from economics by the astonish- 
ingly greener pastures of  a successful career as an artist. Marilou J. Uy 
prepared the index. The project could never have been finished without 
such congenial co-workers. 
Michael R. Darby and James R. Lothian This Page Intentionally Left Blank

The International Transmission of Inflation

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