The government macroeconomic intervention , including the finetuning of macroeconomic policies in order to maintain stable output and employment growth , turned out to be ineffective as was proven by various episodes of macroeconomic development during the 1970s and 1980s , such as the oil price shocks and subsequent misalignment of exchange rates. Perhaps the most notable case was the 'stagflation' experienced by the US economy during the 1970s ' when rising inflation was accompanied by a steadily worsening unemployment rate. This development completely refuted the trade - off between the two undesirable phenomena which had formerly been taken for granted and thus nullified the Keynesian fine-tuning policy prescription which had been based on balancing the evils of inflation and unemployment. These experiences in turn provided an environment for the revival of the liberal tradition : neoliberalism led by Hayek ( 1984a , 1984b , 1989 ) , the birth of the public choice school led by J.M. Buchanan , and the surge of political conservatism led by Margaret Thatcher. Deregulation or liberalization of the private sector has become the core of economic reform in most advanced countries in recent years , and theimegrtance of along-term perspective in macroeconomic policy - making , such as maintaining a rule-based policy , has been emphasized time and time again. It has also been stressed that government failures are due not only to excessive informational requirements, as stipulated by the Hayekian framework , but also to the inherent nature of self-seeking government officials , as seen in the public choice framework.