Introduction and Summary

Abstract

At the start of the 1980s the world economy is suffering from higher unemployment than at any time since the 1930s: it is also suffering from a very high rate of inflation. In contrast to past recessions, the level of unemployment is high largely as the intended result of government policies: for the view that any measures that would reduce the unemployment would inevitably make inflation worse has become the conventional wisdom in most countries. Of course, not all of the unemployment is due to these policies, but much of the unemployment that might have been attributed to other factors would have disappeared if sounder macroeconomic policies had been applied.