Leon H. Keyserling Policy, Economic Growth, and the Fall Employment Budget Concept. (Anthology)
Brazelton, W. Robert, Atlantic Economic Journal
Leon H. Keyserling, a primary author of the Full Employment Act of 1946 and first Vice-Chair and Second Chair of the Council of Economic Advisers to the President, can be generalized in terms of economic policy, economic growth, and an early development of the "Full Employment Budget Concept" (FEB) often credited to Walter Heller under the later Kennedy and Johnson era.
In terms of policy, Keyserling was orthodox when it came to anti-recessionary monetary and fiscal policy and to the basic cause of recession, inadequate demand. However, in terms of inflation, he was unorthodox [Brazelton, Designing U.S. Economic Policy: An Analytical Biography of Leon H. Keyserling, Paigrave Press, 2001; Brazelton, Journal of Economic Perspectives, Fall, 1994]. His belief was that inflation was caused primarily by inadequate supply, not excess demand. As such, economic policy should stimulate supply growth, not restrict demand. The latter would mean decreasing output by operating to the left of the minimum cost on the average cost curve to increase prices (especially in areas of administered pricing) and increase unemployment. Thus, the correct policy would be to stimulate supply via selective policies to expand output in the lagging sectors of the economy in terms of supply and inputs to vital sectors of the economy for long-term growth.
Growth was important to Keyserling. It was the purpose of economic policy. To this extent, he believed that the Accord of 1951 was a mistake. …