Macroeconomics and History

By Britton, Andrew | National Institute Economic Review, January 2002 | Go to article overview

Macroeconomics and History

Britton, Andrew, National Institute Economic Review

Andrew Britton (*)

The Review is pleased to give hospitality to CLARE Group articles, but is not necessarily in agreement with the views expressed. Members of the CLARE Group are M.J. Artis, T. Besley, A.J.C. Britton, W.A. Brown, W.J. Carlin,J.S. Flemming, C.A.E. Goodhart, J.A. Kay, R.C.O. Matthews, D.K. Miles, C.P. Mayer, M.H. Miller, P.M. Oppenheimer, M.V. Posner, W.B. Reddaway,J.R. Sargent, P. Seabright. Z.A. Silberston. S. Wadhwani and M. Weale. Drafts of this article have been discussed among members of the Group, but responsibility for the views expressed rests with the author alone.

Macroeconomic behaviour varies according to the character of the policy regime. There is therefore no truly 'general' theory which will apply at all times and in all places. Over the past hundred years, one model may be appropriate to the period of the gold standard, another to the interwar years, another to the so-called 'Golden Age' after the Second World War, and so on. Expectations, which depend on confidence in the regime, determine the stability of both prices and output. Institutions also adapt in ways that may support, or ultimately undermine, the foundations of the policy regime.


The relation between economics and history was keenly debated a hundred years ago (Keynes, 1891). According to the historical school at that time the laws of economics are different in different countries and in different historical periods. The analytical school, however, sought to build economic theory on axioms of individual rationality which might be of very general application. So far as microeconomics is concerned, or Walrasian general equilibrium theory, it was the neoclassical axiomatic approach which prevailed, and it has constituted the mainstream of economics to this day. Yet the history of the twentieth century demonstrates again and again that economic behaviour can vary fundamentally from one time to another.

The contention of this paper, and of the book on which it is based (Britton, 2001), is that macroeconomics must relate to a particular time and place if it is to be of practical value. There are no answers to the most important questions posed in this branch of economics that are generally correct. The macroeconomics of America or of Europe is not the same as that of Japan, Russia or China. The macroeconomics of the 1930s, or even of the 1970s, is not the same as the macroeconomics of today.

It will, no doubt, be readily agreed that the behaviour of economies will depend on institutional differences: on the openness to trade, the size of the public sector, the influence of trades unions and so on. The particular point to be made here is that economic behaviour reflects the character of the policy regime. It will be argued that the stability of the economy depends crucially on perceptions of the regime in place. Institutions adapt to the regime in ways which may either support or weaken it. This will be illustrated with examples from the history of the past hundred years.

For much of that century, battle was joined between the Keynesians and the monetarists. They held very different views both about the behaviour of the macro-economy and about the appropriate policy regime. It looked as if the debate might in principle be settled if research could uncover a better understanding as to how the economy in fact always behaves. One side would be proved right, and the other proved wrong. If, however, the behaviour of the economy itself adapts to the regime in place, then it is quite possible to say of the Keynesian and the monetarist school that each is right in its own context -- and that in the other context each is wrong.

This methodological issue is very important when assessing the possible implications of a change in policy regime, asking whether the existing or the alternative regime is more appropriate to a particular economy. If the new regime would be very different in character from the old one, then one must look beyond the consequences which could be foreseen if the behaviour of the economy remained the same. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Cite this article

Cited article

Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25,

Note: primary sources have slightly different requirements for citation. Please see these guidelines for more information.

Cited article

Macroeconomics and History


Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25,

    New feature

    It is estimated that 1 in 10 people have dyslexia, and in an effort to make Questia easier to use for those people, we have added a new choice of font to the Reader. That font is called OpenDyslexic, and has been designed to help with some of the symptoms of dyslexia. For more information on this font, please visit

    To use OpenDyslexic, choose it from the Typeface list in Font settings.

    OK, got it!

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Author Advanced search


    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.