782PART TWELVESHORT-RUN ECONOMIC FLUCTUATIONSforecasts made by commercial forecasting firms: Their forecasts of inflation fellmore slowly in the 1980s than did actual inflation. Thus, the Volcker disinflationdoes not necessarily refute the rational-expectations view that credible disinflationcan be costless. It does show, however, that policymakers cannot count on peopleimmediately believing them when they announce a policy of disinflation.THE GREENSPAN ERASince the OPEC inflation of the 1970s and the Volcker disinflation of the 1980s, theU.S. economy has experienced relatively mild fluctuations in inflation and unem-ployment. Figure 33-12 shows inflation and unemployment from 1984 to 1999.This period is called the Greenspan era, after Alan Greenspan who in 1987 fol-lowed Paul Volcker as chairman of the Federal Reserve.This period began with a favorable supply shock. In 1986, OPEC membersstarted arguing over production levels, and their long-standing agreement to re-strict supply broke down. Oil prices fell by about half. As the figure shows, this fa-
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