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Customer Quote by William Vickrey

“The supply-side effect of a restrictive monetary policy is likely to be perverse, in that high interest rates enter into costs and thus exert inflationary pressure.” quote by William Vickrey
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“The supply-side effect of a restrictive monetary policy is likely to be perverse, in that high interest rates enter into costs and thus exert inflationary pressure.”

William Vickrey

About This Quote

Source Academic paper: Monetary Policy and Supply‑Side Effects, 1975

Restrictive monetary policy raises interest rates, increasing production costs and unintentionally fueling inflation, contrary to its intended effect.

In simple terms: High rates can cause inflation via cost pressures.

Key Takeaway

Balance policy tools to avoid counterproductive outcomes.

Themes

monetary policy inflation interest rates costs

Mood

analytical cautious

Type

theoretical policy‑oriented

When to use this quote

  • central banking
  • budget planning
  • business investment
  • pricing strategy

Key Concepts

macro‑economics policy trade‑offs price dynamics

Questions to Reflect On

  • How can policymakers monitor cost‑push inflation?
  • What alternatives exist to curb inflation without raising rates?
A Different Perspective

Policy may have delayed or uneven effects across sectors.

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