Keynes gave a clear and convincing analysis of how to ameliorate the endemic tendency of capitalist economics to engender periods of high unemployment. Partly as a result of his influence, the post-war history has been one of unparalleled and nearly continuous growth in output and employment. However for the past four or five years now this trend has been broken: everywhere there is unemployment and varying degrees of depressed trade. In spite of a (waning) commitment to Keynesianism, governments stand paralysed in this situation. It is generally agreed that this inaction has two principal sources: there is the effort to decelerate inflation (discussed in part II) and the fact that reflation of an economy leads directly to a worsening of the balance of payments. The enormous growth of international trade has meant that the scope for independent action of a nation has been seriously eroded. Not unconnected with this growth in trade has come a truly impressive accumulation of data, so that it becomes ever more feasible to attempt a quantitative analysis of the trade network of the many countries or regions of the world.
KeywordsExchange Rate Price Level Price Rise Marginal Propensity Variable Exchange Rate
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- 4.‘A Ten-Region Model of World Trade’, in W. Sellekaerts (ed.), International Trade and Finance, Essays in Honour of Jan Tinbergen (London: 1974).Google Scholar