Journal Article

A bright future can be ours! Macroeconomic policy for non-eurozone Western countries

J. W. Nevile and Peter Kriesler

in Cambridge Journal of Economics

Published on behalf of Cambridge Political Economy Society

Volume 38, issue 6, pages 1453-1470
Published in print November 2014 | ISSN: 0309-166X
Published online March 2013 | e-ISSN: 1464-3545 | DOI: https://dx.doi.org/10.1093/cje/bes083

More Like This

Show all results sharing these subjects:

  • Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
  • Monetary Policy, Central Banking, and the Supply of Money and Credit
  • Macroeconomics and Monetary Economics

GO

Show Summary Details

Preview

Radical changes in macroeconomic policy could produce a brighter future. The neoclassical myth that a free-market economy inevitably moves to an equilibrium position determined solely by supply-side factors must be rejected and replaced by the insight that the position of an economy in the longer term is path dependent. Fiscal policy in recessions should be biased towards increasing physical and human capital, which will improve the productivity of an economy and raise living standards and hence taxable capacity, thus enabling future public debt to be reduced if this is desirable. Monetary policy should play a very minor role in aggregate demand policy, with interest rate settings largely used to help achieve long-term income distribution goals. All this is fundamental to Geoff Harcourt’s vision of macroeconomic policy, and this paper spells out how this vision can be implemented in 2012 in Western countries not hamstrung by eurozone rules and regulations.

Keywords: Macroeconomic policy; Cyclical fluctuations; Money and interest; Monetary policy; Fiscal policy; E00; E52; E62

Journal Article.  10422 words. 

Subjects: Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook ; Monetary Policy, Central Banking, and the Supply of Money and Credit ; Macroeconomics and Monetary Economics