Are Full Employment Policies Obsolete?

Autor: Fernando J. Cardim de Carvalho, G Julio López
Rok vydání: 2007
Předmět:
Zdroj: International Journal of Political Economy. 36:5-23
ISSN: 1558-0970
0891-1916
DOI: 10.2753/ijp0891-1916360301
Popis: Full employment policies fell into disfavor in the industrial countries in thelate 1970s, when concerns about accelerating inflation became overwhelm-ing. In developing economies, on the other hand, emphasis had always beengiven to high growth policies, rather than full employment as such. The tur-bulences of the 1970s proved to be fatal to those policies as well. As a result,full employment policies seemed to be doomed since then.Although allegedly based on the same evidence, that is, the failure ofKeynesian policies in the 1970s, the attack on Keynesian ideas was two-pronged. On the one hand, Milton Friedman first and Robert Lucas Jr. latersubstituted the concept of natural rate of unemployment for involuntary un-employment as the basic notion of macroeconomic analysis, redirecting thedevelopment of the theoretical debate in macroeconomics away fromKeynesian concerns. The second line of attack, in contrast, directly targetedKeynesian policies and developed along two lines: Some critics argued thatKeynesian policies had been effective to fight a depression but were uselessor, worse, against inflation; others argued that Keynesian policies had alwaysbeen wrong. In sum, Keynesian policies, according to their critics, were ei-ther outdated in the 1970s or had just been wrong all along.At the very least, it is often alleged that new issues have emerged aboutFernando Carvalho is a professor at the Institute of Economics, Universidade Fed-eral do Rio de Janeiro, and acknowledges financial support from CNPq and Faperj,through the Pronex program. Julio Lopez is a professor of economics at the UniversidadNacional Autonoma de Mexico and acknowledges the financial support received fromPAPIIT-Proyecto IN301606, UNAM.
Databáze: OpenAIRE
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