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The 1981 recession is thought to have been caused by the tight-money adopted by Paul Volcker, chairman of the Federal Reserve Board, before Ronald Reagan took office. Reagan supported that policy. Economist Walter Heller, chairman of the Council of Economic Advisers in the 1960s, said that “I call it a Reagan-Volcker-Cater recession.” The resulting taming of inflation did, however, set the stage for a robust growth period during Reagan’s administration.
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