(A version of this work was published in the Federal Reserve Bank of Richmond's Economic Review, 1988, V. 74, No. 4 )

Forecasters experienced considerable difficulty in recognizing rising inflation and predicting its intensity in 1972-82. Possible explanations discussed are: 1) unpredictable supply shocks, 2) excessive attention to nonmonetary developments, and 3) actual money growth overshooting its targeted growth rate.

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