Journal Article

The UK’s Coalition government and heterodox economics

Michael Ellman

in Cambridge Journal of Economics

Published on behalf of Cambridge Political Economy Society

Volume 39, issue 5, pages 1457-1464
Published in print September 2015 | ISSN: 0309-166X
Published online August 2015 | e-ISSN: 1464-3545 | DOI: https://dx.doi.org/10.1093/cje/bev043
The UK’s Coalition government and heterodox economics

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  • Economic Methodology
  • Wages, Compensation, and Labour Costs
  • National Budget, Deficit, and Debt
  • General Aggregative Models
  • Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
  • Public Economics

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The UK Coalition government’s economic policy was primarily aimed at reducing the large fiscal deficit that it inherited, mainly by cutting expenditure. This was considered irrational by heterodox economists on the grounds that it would harm employment and output. Politicians influenced by this tradition advocated a plan B. Experience has shown that the Coalition government’s policy was not irrational. Employment reached record heights and economic growth resumed. The paper draws attention to the implications of these facts for heterodox economics and economic policy. It is concluded that, just as mainstream economics had to rethink after the economic crisis of 2008–09, so heterodox economics has to rethink after the recovery of 2014–15.

Keywords: Austerity; Heterodox economics; Employment policy; Fiscal policy; B50; E12; E60; H12; H60; J38

Journal Article.  4683 words. 

Subjects: Economic Methodology ; Wages, Compensation, and Labour Costs ; National Budget, Deficit, and Debt ; General Aggregative Models ; Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook ; Public Economics

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