Journal Article

Economic Policy and social democracy; the Austrian experience

A Guger

in Oxford Review of Economic Policy

Published on behalf of The Oxford Review of Economic Policy Ltd

Volume 14, issue 1, pages 40-58
Published in print March 1998 | ISSN: 0266-903X
Published online March 1998 | e-ISSN: 1460-2121 | DOI: http://dx.doi.org/10.1093/oxrep/14.1.40
Economic Policy and social democracy; the Austrian experience

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In the 1970s, Austria's social democratic government pursued a distinctive policy strategy to overcome the period of stagflation and to maintain full employment after the first oil crisis. In the Keynesian tradition, the model assigned expansionary fiscal and monetary policy to stabilize effective demand and employment; the exchange rate to curb inflation; while the balance of trade was left to moderate incomes policies by the social partners. In the 1970s, this strategy was successful and the macroeconomic performance of the Austrian economy was outstanding. In the restrictive environment of the 1980s, the Austro-Keynesian model waned; while the stabilizing elements of the model, i.e. the hard currency and moderate incomes policies, were maintained, deficit spending as a discretionary strategy was given up. But, although the Austrian economy has been put under much competitive pressure owing to a continuous appreciation of the schilling along with the Deutschmark, its macroeconomic performance has been at least as good as the European or OECD average, but with lower unemployment.

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Subjects: Economic Development and Growth ; Public Economics ; Political Economy ; Public Policy

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