Fiscal Policy, 1974/5 -1980/1: Description and Measurement

This article examines the conduct of fiscal policy since 1974. It is in two parts. The first contains a chronological narrative of what policy-makers did during the period. It describes, in rapid summary, the major policy developments and the setting within which policy formation evolved. The style of part I is more journalistic than scientific, the intention being to convey some sort of impression of what things were like at the time—of the pressure of immediate problems and the unexpectedness of many economic developments—an impression which would perhaps be lost in a more analytical and abstract treatment. The second part is concerned with the more technical task of measuring the effects of policy changes. It emphasizes the leverage of fiscal instruments—the first impact' of policy upon the level of demand—rather than the more indirect effects on the balance of payments and inflation, important though these may have been as target variables.