Short answers, pulled from the story.
Governments manage economies through fiscal policy and monetary policy. Fiscal policy involves taxation and spending decisions made by elected officials, while monetary policy operates through central banks adjusting interest rates and managing the money supply.
The Reserve Bank of Australia sets these rates independently from political interference to maintain stability. This independence allows the bank to adjust interest rates without direct government influence on economic management.
Stagflation forced governments to rethink their approach because the period saw high inflation combined with stagnant growth. This combination challenged previous assumptions about how policy should work and exposed flaws in discretionary policies that suffered from dynamic inconsistency.
In 2019, economists Abhijit Banerjee, Esther Duflo, and Michael Kremer received the Nobel Prize for their work applying randomized field experiments to economic decision-making. Their movement originated from medicine where doctors use clinical trials to test treatments before prescribing them widely.