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Why Keynesian Policy was More Successful in the Fifties and Sixties than in the Last Twenty Years

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  • J. W. Nevile
  • P. Kriesler

Abstract

In the 1950s and 1960s unemployment averaged about 2 per cent. The lowest level of unemployment in the last twenty years was double that and long term unemployment, virtually unknown in the 1950s and 1960s, has been a severe problem. In each period there were two major slumps. We examine the progress of each slump and macroeconomic policy responses in each case, in order to search for reasons for this contrast. The priority given to minimising unemployment rather than restraining inflation is the most important difference between the two periods. Other major principles stand out, the most important of which are that in response to a downturn a fiscal policy stimulus is essential and must play the major part of any response; and that implementation must be swift and then followed up by further measures if necessary.

Suggested Citation

  • J. W. Nevile & P. Kriesler, 2011. "Why Keynesian Policy was More Successful in the Fifties and Sixties than in the Last Twenty Years," The Economic and Labour Relations Review, , vol. 22(1), pages 1-16, May.
    • Handle: RePEc:sae:ecolab:v:22:y:2011:i:1:p:1-16
    DOI: 10.1177/103530461102200101
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    References listed on IDEAS

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    1. Peter Kriesler & Marc Lavoie, 2007. "The New Consensus on Monetary Policy and its Post-Keynesian Critique," Review of Political Economy, Taylor & Francis Journals, vol. 19(3), pages 387-404.
    2. Chang‐Jin Kim & James Morley & Jeremy Piger, 2005. "Nonlinearity and the permanent effects of recessions," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 20(2), pages 291-309.
    3. Neil R. Ericsson & John S. Irons & Ralph W. Tryon, 2001. "Output and inflation in the long run," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 16(3), pages 241-253.
    4. Furceri, Davide & Mourougane, Annabelle, 2012. "The effect of financial crises on potential output: New empirical evidence from OECD countries," Journal of Macroeconomics, Elsevier, vol. 34(3), pages 822-832.
    5. Philip Arestis & Mike Marshall (ed.), 1995. "The Political Economy of Full Employment," Books, Edward Elgar Publishing, number 18.
    6. David C. Colander & Harry Landreth (ed.), 1996. "The Coming Of Keynesianism To America," Books, Edward Elgar Publishing, number 451.
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    Cited by:

    1. GC Harcourt & Peter Kriesler & John Langmore, 2013. "Faith, works and talents entwined: Driving forces behind John Nevile’s contributions," The Economic and Labour Relations Review, , vol. 24(2), pages 228-237, June.

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