Macroeconomic Policy

In the course of this chapter many of the threads which run through earlier chapters will be pulled together with a view to explaining the evolution of macroeconomic policy in the UK. The purpose is both to examine the theoretical models which at various times have been adhered to with varying degrees of conviction by UK governments, and also at the empirical assessment of the outcomes from their use. This chapter necessarily contains a more wide-ranging historical perspective than most others, but in common with them it concentrates upon the evolution of theory and practice over the past two decades. In setting this discussion at the end of the book, rather than at the beginning as is commonly the case in other texts, the problem of introducing many matters as yet unfamiliar to some readers, such as the exchange rate, is avoided. To retain the continuity of the narrative it is assumed that the reader has indeed read the previous chapters, but where necessary he or she is referred back to the discussion earlier in the book.