Keynes, Uncertainty and the Global Economy
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Keynes, Uncertainty and the Global Economy

Beyond Keynes, Volume Two

Edited by Shelia C. Dow and John Hillard

The revival of interest in Keynesian economics since the late 1980s reinstates the importance of Keynes’s contribution to economic theory and policy. This is the second of two volumes in which authoritative contributions are presented by an outstanding group of international experts to celebrate Keynesian economics, and to review and further the developments of post Keynesian economics of recent years.
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Chapter 11: Keynes, Post Keynesians and methodology

Beyond Keynes, Volume Two

Sheila C. Dow

Extract

11. The Maastricht Treaty: unemployment, competitiveness and distribution Jesper Jespersen1 I INTRODUCTION This chapter challenges the argument that enhanced monetary integration in Europe will improve the economic conditions for the creation of wealth and prosperity. The impact on employment, competitiveness, distribution and the environment of the establishment of a monetary union is examined. Particular attention is devoted to the implications for the welfare state of the requirement to fulfil the so-called ‘convergence criteria’. According to the Maastricht Treaty, it is solely financial conditions which have to be fulfilled by the participant states, notwithstanding the consequences this may have for the real economy, not to mention welfare in a broader sense. This procedure ignores important societal aspects, such as unemployment, income distribution and environmental damage. It is suggested that a European welfare index should be created to correct the analytical and empirical bias in the ‘European Monetary Debate’. II EUROPEAN INTEGRATION AND THE WELFARE STATE If one looks at the economic and political history of (Northern) European countries for the last fifty years, two catch phrases characterize the period: increasing integration and an expanding ‘welfare state’. One cannot really say that one of the characteristics had precedence over the other. The experiences during the inter-war period had been so discouraging that it became an explicit demand from the democratic parties to create a new approach to economic policy after the Second World War had finished. The right-wing parties supported the market, competition and free trade whereas the left called...

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