Impact of Oil Shocks on Economic Reforms and Unemployment

The removal of controls on interest rates led to important liberalizations in the market, but Muldoon's attempts at limited economic reforms were hindered by the oil shocks, particularly the second one in 1979, which led to rising unemployment rates. Muldoon, who was deeply influenced by the Great Depression, was determined to prevent high unemployment in New Zealand, which constrained his willingness to implement more orthodox macro policies. This ultimately led to his introduction of a wages and prices freeze.