Abstract
There is no particular reason to link economic growth with democracy. Yet the search for economic growth belongs to the age of democracy. In the twenty-first century, a policy goal is to “maximize” economic growth.
But what is economic growth? For central bankers today, economic growth can be attained by monetizing fiscal deficits, but there has also been and continues to be an intellectual battlefield on this topic. In this chapter, we briefly walk through the recent history of the idea of economic growth. At the end, we discuss the implications for investing.
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Notes
- 1.
According to Nicholas Kaldor, David Ricardo pioneered the theory of distribution. Although Ricardo explicitly says in the preface to his Principles of Political Economy and Taxation that “…To determine the laws which regulate this distribution, is the principal problem in Political Economy…”.
- 2.
The Taylor rule, after John Brian Taylor, currently the Mary and Robert Raymond Professor of Economics at Stanford University.
- 3.
For a good discussion of this system, refer Zerohedge’s article “Desperately Seeking $11.2 Trillion In Collateral, Or How “Modern Money” Really Works”, May 1, 2013. In July 2017, with the plans to replace Libor with the Broad Treasuries Funding Rate, we could say that, if the plans are confirmed, we will effectively use fiscal deficits to supply currency.
- 4.
“How to Save American Finance from Itself”, April 8, 2013, at New Republic: https://newrepublic.com/article/112679/how-save-american-finance-itself
- 5.
Not from a mechanistic perspective but from an economic one.
Bibliography
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Arisson, M. (2018). Economic Growth. In: Investing in the Age of Democracy. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-95903-0_10
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DOI: https://doi.org/10.1007/978-3-319-95903-0_10
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