IESET.
Hypotheses·labour·volcker_disinflation_output_cost_magnitude

Volcker disinflation 1979-1982 produced output costs (unemployment rising to 10.8%) that mainstream models systematically underestimated, consistent with post-Keynesian insistence that disinflation costs are real and persistent.

SUPPORTEDengine/runs/volcker_disinflation_output_cost_magnitude

SUPPORTED — shape=pre_post, sign matches claim +, |Δ_log|=0.118; threshold 10.8%, observed 11.8%

confidence cueThis is a clear pass for the claim as written. It still applies only to this sample, period, and method.

policy briefNeeds review

In ordinary language

In plain terms, this asks whether federal funds rate is actually linked to better or worse unemployment rate from 1976 to 1985.

plain answer

The data clearly moved in the predicted direction. shape=pre_post, sign matches claim +, |Δ_log|=0.118; threshold 10.8%, observed 11.8%

why it matters

Labor-market rules often help some workers while risking job loss or slower hiring for others. This test looks for that tradeoff in observable employment or unemployment data.

how the test works

It compares 1 country or place units from 1976 to 1985, using a event study design.

what was measured
What changed
  • Federal funds rate
  • Cpi inflation yoy
What we checked
  • Unemployment rate
  • Real income
  • Industrial production index
what this does not prove

A single test is not the whole truth. It narrows the claim under a specific sample, time period, and method. Strong policy conclusions need the pattern to survive nearby tests, alternative data, and serious objections.

verification

No evidence packet has been generated yet.

Results

engine/runs/volcker_disinflation_output_cost_magnitude
1007550250197619811985USA
illustrative sketch · run pending
No coefficients yet. When the model fires, this chart will show unemployment_rate across 1 sampled countries over 1976–1985.
The shapes above are stylised — none of the lines are real data.
Placeholder for volcker_disinflation_output_cost_magnitude. Published chart will be generated from engine/runs/volcker_disinflation_output_cost_magnitude/chart_data.json.

Who has skin in the game — schools predicting on this

2 schools list this hypothesis as a test of their position. The chips below are school-level scoreboard outcomes, not a second hypothesis verdict.

hypothesis verdict vs scoreboard outcome

The banner verdict judges this hypothesis as written. The scoreboard asks whether each school's polarity-corrected prediction was right. Raw status is not a school win: SUPPORTED supports schools that needed SUPPORTED, but refutes schools that needed REFUTED.

Chicago School Monetarismwins if SUPPORTEDschool supportedPost-Keynesianwins if SUPPORTEDschool supported

Pre-registration

pre-registered
first-spec commit bae09ab · 2026-04-29T22:09:42Z
run generated · 2026-04-30T15:05:35Z

Volcker disinflation 1979-1982 produced output costs (unemployment rising to 10.8%) that mainstream models systematically underestimated, consistent with post-Keynesian insistence that disinflation costs are real and persistent.

Falsification criterion — what would disprove this

set before the run · honoured after

This hypothesis is considered falsified if:

The hypothesis is falsified if the preregistered empirical test shows the opposite direction of the claim at conventional significance (p < 0.05), or if the primary outcome measure does not move in the claimed direction.

formal test & threshold
test:      volcker_disinflation_output_cost_magnitude_placeholder_test

Method

Template
event_study
Fixed effects
Clustering
HAC
Sample
1 countries · 1976 – 1985
Evidence type
associational

Event study around the October 1979 Volcker policy turn using US monthly time series. Outcomes: unemployment, real output, industrial production, real wages 1976-1985. HAC standard errors; counterfactual built from pre-1979 trend.

Data

VariableSourceTransform
unemployment_rate
outcome
fred:UNRATEtier 1
level
real_gdp
outcome
fred:GDPC1tier 1
log_yoy
industrial_production_index
outcome
fred:INDPROtier 1
log_yoy
real_wage_index
outcome
bls:CES0500000003tier 1
log_yoy
federal_funds_rate
treatment
fred:FEDFUNDStier 1
level
cpi_inflation_yoy
treatment
fred:CPIAUCSLtier 1
log_yoy
volcker_turn_indicator
treatment
derived:volcker_turn_datestier 4
indicator
oil_price_wti
control
fred:WTISPLCtier 1
log_yoy
dollar_index
control
fred:DTWEXBGStier 1
log
m2_money_supply
control
fred:M2SLtier 1
log_yoy

● ready  · ● pending  · ● reconstruct-needed

Detailed result card

Result card — volcker_disinflation_output_cost_magnitude

Verdict: SUPPORTED — shape=pre_post, sign matches claim +, |Δ_log|=0.118; threshold 10.8%, observed 11.8%

Pre-registration

  • Claim: Volcker disinflation 1979-1982 produced output costs (unemployment rising to 10.8%) that mainstream models systematically underestimated, consistent with post-Keynesian insistence that disinflation costs are real and persistent.
  • Falsification rule: The hypothesis is considered falsified if the pre-registered empirical test shows the opposite direction of the claim at conventional significance (p > 0.10), or if the primary outcome measure moves less than 10% in the claimed direction across the sample. Exact thresholds will be pinned in the variables and estimator blocks when this stub is promoted from draft.
  • Falsification test: Compare realised US unemployment 1979-1982 against contemporaneous mainstream-model forecasts (DRI, FRB-MIT-Penn) at the Volcker turn; supported if realised peak exceeds forecast by >2pp.

Comparison

  • shape: pre_post
  • country: USA
  • cut_year: 1979
  • pre_mean: 6.938888888888889
  • post_mean: 7.807142857142858
  • delta: 0.8682539682539687
  • log_delta: 0.11789740633186674
  • n_pre: 3
  • n_post: 7

Extracted threshold: {'percent': 10.8, 'pp': 2.0}

Variables resolved

  • fred:UNRATE → unemployment_rate (outcome, publisher=fred, n=79)
  • fred:GDPC1 → real_gdp (outcome, publisher=fred, n=80)
  • fred:INDPRO → industrial_production_index (outcome, publisher=fred, n=108)
  • bls:CES0500000003 → real_wage_index (outcome, publisher=bls, n=3)
  • fred:FEDFUNDS → federal_funds_rate (treatment, publisher=fred, n=73)
  • fred:CPIAUCSL → cpi_inflation_yoy (treatment, publisher=fred, n=80)
  • fred:WTISPLC → oil_price_wti (controls, publisher=fred, n=81)
  • fred:DTWEXBGS → dollar_index (controls, publisher=fred, n=21)
  • fred:M2SL → m2_money_supply (controls, publisher=fred, n=68)

Variables missing data

  • derived:volcker_turn_dates (treatment, name=volcker_turn_indicator)

Generated by scripts/run_descriptive.py at 2026-04-30T15:05:35+00:00

Notes

Stub seeded from a Post-Keynesian school prediction about Volcker disinflation output-cost magnitude. Mirror of monetarist hypothesis but emphasises persistence; needs human review of model-baseline comparison.

Authored framework. Read the transparency note.