During the past two decades, the macroeconomic policy debate has been dominated, both in developed and developing countries, by supply-side considerations. Distinguished contributors to this important new book conclusively argue that this has led towards depression at a world level, and particularly in transitional and developing economies.
Restoring Demand in the World Economy examines the necessity to rehabilitate the role of effective demand, in both the analysis of past economic events and in shaping current economic policy. At the theoretical level, the contributors argue conclusively that the level of effective demand and the aggregate distribution of income play a dominant role in the macroeconomic framework of all economic systems. This economic theory is then applied to specific situations including:
* austerity and monetary union in Europe
* the demand implosion in Eastern Europe and the former USSR
* the problem of financial fragility in developing countries
* the demand links between East Asia, Japan and the United States
* inflation paranoia, deflationary gaps and imbalances in the major industrial countries
* the failure of post-war schemes for the stabilization of global demand.
This important contribution presents a strong case for rehabilitating the role of demand in economic policy and decision making. This book will be of use to economic theorists, policymakers and academics with an interest in international economics.