Growth and Economic Development

Growth and Economic Development

Essays in Honour of A.P. Thirlwall

Edited by Philip Arestis, John S.L. McCombie and Roger Vickerman

This valuable and engaging new book bears eloquent testimony to A.P. Thirlwall’s substantial contribution to economics over the last 40 years. The volume does not attempt to provide a comprehensive review of such a prolific figure, but rather demonstrates the considerable influence that his work on economic theory has had on his contemporaries, and the profession as a whole.

Chapter 11: Narrowing the Options: The Macroeconomic and Financial Framework for EU Enlargement

Heather Gibson and Euclid Tsakalotos

Subjects: development studies, development economics, economics and finance, development economics, post-keynesian economics

Extract

Heather Gibson and Euclid Tsakalotos Introduction Keynesian economists, in the tradition of Nicholas Kaldor, Paul Davidson, and Tony Thirlwall, have very strong opinions about the economy and economic policy.1 But more importantly for the purposes of this chapter, it is also the case that they have sought to promote a framework for economic decision-making that allows for the clash of ideas to have some impact on outcomes. That is to say, they have not seen democratic accountability and discretion, as is the case with many of their ‘classical’ and ‘new classical’ opponents, as a problem to be overcome through various devices such as independent central banks, budgetary rules and so on. Rather they have seen democratic processes as part of the answer to good economic policy-making. In part, this stems from their view on the inherent instability of the market economy, requiring as it does appropriate remedies. Moreover these remedies are unlikely to be the same for all economies for all time. But, in part it also derives from an optimistic stance about the human condition – it should not be beyond people to devise a better institutional framework to deal with economic instability, promoting economic growth as well as addressing issues such as poverty and income inequality. Over the last twenty years, this admirable stance has been on the defensive. Nowhere is this clearer than in the manner in which European integration has been promoted. At the level of official EU discourse, with all the emphasis on subsidiarity, and more...

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