Government Debts and Inflation: Stumbling-Blocks in the Way of Keynesian Full Employment Policy

Steindl, Josef

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Document type:: Works

Collection:: Josef Steindl Collection

Title:: Government Debts and Inflation: Stumbling-Blocks in the Way of Keynesian Full Employment Policy

Author:: Steindl, Josef

Scope:: Typoskript, 10 Blätter, handschriftliche Anmerkung auf Seite 1, nummeriert

Year of publication:: 1976

Source material date:: [vermutlich um 1976]

Description:: It has been maintained, or pretended, thet Keynesian policies have failed because of obstacles which made them unworkable. Among these are most prominent foreign balance deficits, accumulating government debt and inflation. I do not really believe that these have been sufficient to cause the great change in economic trends and in people's outlook since 1974 (or earlier), but they are serious problems, and, apart from foreign balance problems which all Keynesians have been fully aware of, and which depends entirely on international cooperation, they have not always been taken seriously enough. (Auszug, S. 1)

Note:: Unveröffentlichtes Typoskript.

Topic:: Economic history,economic theory,current developments

JEL Classification:: E12 [General Aggregative Models: Keynes, Keynesian, Post-Keynesian] H68 [Forecasts of Budgets, Deficits, and Debt]

Shelfmark:: S/M.59.5

Access:: Free access

10 An acceleration of the inflation, equivalent to a change (or attempted change) in income distribution will happen, if starting from the above transmission model, either the trade unions increase their real wage target, or the employers increase their profit mark-up, or the farmers ask and are granted higher prices for their products. It is evident, to my mind, from this description, that inflation is the expression of a political conflict about income distribution. This is illustrated also by the observation that the greater or lesser degree of chronic inflation in different countries plausibly depends on the existence of a climate of compromise or of confrontation respectively. This means that also a solution to inflation problems must largely be found on a political plane. It must be stressed that inflation means different things in different countries depending on institutions: It is borne more lightly in one set of institutions than in another (U.S.!). Finally, without undue cynicism, it may be noted that inflation provides relief to other problems, such as the public debt. Indeed in a situation of high interest rates when governments borrow on long term at very high rates the prospect of inflation subsiding is not one of unmitigated blessing. If a country is settled with a lot of such debt inflation subsiding to low levels will probably induce an increase in indirect taxation which in turn will stimulate inflation again.

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