The inflation was stopped by tight monetary policy and the economy has boomed with the tax cuts inspired by Mundell and his sidekick, Arthur Laffer, and implemented by Ronald Reagan. An obscure GOP congressman from Buffalo named Jack Kemp, who had been QB for the Buffalo Bills in his earlier career, read this article and ran with it. Note that while Mundell's prescription for ending inflation with tighter monetary policy has been achieved, he continues to find the relinking of the dollar to gold as elusive as it was way back then. And even when you disagree with him, you must disagree with your hat in the hand. The heart of the current problem, Mr. Mundell believes, lies in the international arena.
Inflation is, and has been for several years, a global phenomenon.
The collapse of discipline of the balance of payments has unleashed a wave of inflation on the world. He believes that the eventual solution must involve not only control of the dollar supply produced in the United States, but regulation of the Eurodollar market, the restabilization of gold and a return to the fixed system. With Professor Arthur B. Laffer of the University of Chicago, he has worked out an economic model to deal with this problem. To deal with the immediate crisis of simultaneous inflation and recession, though, Professor Mundell departs from the traditional belief that monetary and fiscal policies should always be working in the same direction. He believes that inflation and unemployment are separable problems and that to combat them distinct policy instruments are required.