Full Employment and Price Stability in a Global Economy

Full Employment and Price Stability in a Global Economy

Full Employment and Price Stability in a Global Economy

Full Employment and Price Stability in a Global Economy

Synopsis

The economic performance of many countries has deteriorated significantly during the last decade. The 1990s witnessed a global recession, the Mexican currency crisis and later, the Asian and Russian crises. The objective of full employment and price stability appears to be an illusory goal for many of the economies of the emerging global market system. This book offers new policy prescriptions from the post Keynesian perspective to achieve full employment without inflation. Paul Davidson and Jan Kregel - both world renowned economists - have selected papers that rigorously examine real world issues including: ¿ the challenge of attaining external balance with internal growth and employment ¿ speculation and volatile financial markets in the quest to achieve full employment without inflation ¿ the role of money in combating unemployment ¿ the role of institutions in stabilizing economies ¿ the advantages and disadvantages of the Euro and its implications in the world economy ¿ Keynes's plan to reform the international payments system in the post war era The book will be welcomed by economists, especially those interested in international economics, by politicians, policymakers and by all those concerned with global employment and inflation issues.

Excerpt

As we approach the millennium, the economic performance of many countries has deteriorated significantly not only from the post World War Golden Age of Economic Development (1948-73), but also from the go-go years of the 1980s. The 1990s started with a global recession from which only the US and the UK were able to recover and significantly reduce their unemployment rates without incurring inflation. The global economy was hit first by the Mexican currency crisis and a few years later by the Asian currency crisis which laid low those Asian developing countries that had been the model of open market economic growth. The Russian currency crisis adds an additional threatening element. Today the objective of full employment and price stability still appears to be an illusory goal for many of the economies of the emerging global market system. In a speech on 4 September 1998, Federal Reserve Chairman Alan Greenspan wondered whether the United States could remain an 'island of prosperity in a global economy threatened by recession and depression'.

This volume represents a selection of the best of approximately 60 papers that were presented and discussed at the Fifth Post Keynesian Conference in Knoxville, Tennessee sponsored by the Center for Full Employment and Price Stability, the Journal of Post Keynesian Economics and the University of Tennessee.

In the initial article, Lord Robert Skidelsky provides the historical background of the development of Keynes's plan for reforming the international payments system after the Second World War. Keynes's initial impetus was to provide an alternative to Germany's proposal developed by Finance Minister Walter Funk for a New Economic Order for settling payments among the nations of Europe after the war. Since the German plan has an amazing resemblance to the Euro scheme initiated on 1 January 1999, comparison of the Keynes and Funk plan is not only of historical interest but has implications for the global economy of the 21st century. The chapters by McCombie and Arestis and Sawyer discuss the advantages and disadvantages of the Euro and its implications for Europe's ability to achieve full employment without inflation. This is followed by an article by Hieke who discusses the problems of external balance and employment.

Chapters by Davidson and Terzi discuss the effect of speculation and volatile financial markets on the ability of modern money-using market-oriented economies to achieve full employment without inflation.

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