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

9 as threatened to take place. Certainly "inflationary expectations" must have been very restrained (it is also remarkable that the British Government borrowed long-term at rates far below the inflation). Further, it is characteristic that inflation rates, in the opinion of most economists, can be brought down only after years. They are resistant. Again, while a constant rate of inflation will affect the creditor-debtor relations, it seems that otherwise people adjust to it and are not unduly upset by it. Thus, it would seem that it is acceleration (or deceleration) of inflation which (beyond the influence on debt value) affects the shares of various people in the income. We can imagine a constant rate of inflation by considering the shift of wages to prices, and prices to wages. If other cost elements - agricultural and raw materials, imports,and indirect taxes - move in proportion to wages, and if wages adjust to the last period's price increase, aiming at a real wage target which corresponds to the increase in productivity - then a given rate of inflation will be transmitted from one period to the next (inherited inflation). The income distribution grosso modo will be unchanged. This transmission mechanism explains why a reduction of the rate of inflation can not be obtained quickly.

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