Table of Contents

Employment, Growth and Development

Employment, Growth and Development

A Post-Keynesian Approach

New Directions in Modern Economics series

Edited by Claude Gnos, Louis-Philippe Rochon and Domenica Tropeano

This topical book addresses unemployment in Europe, the wrong-headed reliance on NAIRU to formulate policy, distributional conflicts and financial factors, as well as problems faced in developing countries with respect to exchange rate policy, central banking, challenges to growth, and international financial flows. In the first part of the book the chapters deal with issues related to employment policies, economic growth and development while the second part is dedicated to development and growth issues in open-economy developing countries.

Introduction: Post-Keynesian Economic Policy – a Post-crisis View

Claude Gnos, Louis-Philippe Rochon and Domenica Tropeano

Subjects: economics and finance, post-keynesian economics

Extract

Claude Gnos, Louis-Philippe Rochon and Domenica Tropeano Whether the worldwide crisis is over is a question that is not easy to answer. After all, economic performances have differed considerably from one country to another, and while banks, where the crisis originated, are now doing much better, the lingering macroeconomic effects are still being felt. Nowhere is this more evident than in the USA, where there is increasing talk of a second recession, and within Europe, where some countries, such as Greece, Ireland, Portugal and Italy, are approaching a catastrophic end, exacerbated no doubt by the strict austerity measures now being contemplated by the European Parliament. And while it has already been almost four years since the crisis began, the prospects for sustained growth seem far away, leading some now to be openly discussing the industrialized world’s own ‘lost decade’. Indeed, it is surely legitimate to ask: where will growth come from? On the consumption side, consumers do not seem to be in any hurry to spend; rather, they seem unable to spend. With historic levels of debt, consumers will more probably be busy reducing those debt levels than consuming. Indeed, in most countries, growth in nominal wages has been flat, resulting in decreasing wage shares. In addition, income distribution has become even more skewed, with the top 1 per cent of income earners increasing dramatically their share of total income and total wealth. In the end, consumers are being squeezed and are unlikely able to contribute much to the growth...