Business: A High Price for Full Employment

Has the U.S. economy entered an unchartered new era in which the old rules no longer apply? That question has been nagging many businessmen and policymakers who are concerned and puzzled about the persistence of relatively high inflation at a time of expanding employment and steady recovery. One man who thinks he has the answer is Dale Jorgenson, a Harvard economist whose thinking about the mid-1970s American economy is attracting increasing attention.

Jorgenson, 44, argues that the explosive rise in world oil prices has wrought a fundamental change in the U.S. economy—one that bodes well for jobs but holds out dim long-term...

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