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

8 the average wage exceeds that of the average productivity). Another view attributs inflation to the wage push exerted by trade unions. Actually it was a matter of surprise that things worked relatively well, because many economists had thought that the system could not work without an industrial reserve army. It has to be noted, though, that there existed a substitute for that in the influx of labour from agriculture, from households and from abroad. The acceleration of inflation started only in the seventies. Could this be interpreted as a delayed but necessary consequence of a long period of full employment? I think that the well known special factors - rise in raw material and food prices, the oil shock, and a wage explosion which can be understood in political terms - are sufficient to explain what happened. I shall not go into the further development of inflation from the middle 70'ies which was influenced by weakening of productivity growth which inturn resulted from unemployment and restrictive policies. This decade of inflation gives rise, however, to some observations. It is remarkable that high and sometimes exorbitant (as in Israel!) rates of inflation have never led to hyper inflation as in the time after the first world war in Central Europe. Neither unlimited increase of velocity of circulation, nor de-monetisation and dis-intermediation has even so much

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