Abstract
There is widespread agreement that a faster, sustained rate of growth of the Australian economy is required to achieve a substantial lasting reduction in unemployment. As Burgess and Green (2000) argue, on current estimates of the relevant variables, including productivity growth and labour-force growth, GDP growth of around 4.3 per cent per annum is required to reduce unemployment by 1 per cent per annum. It is abundantly clear that such a level of GDP growth is much bigger than the trend rate of growth, of about 3 per cent a year, achieved over the last 25 years. It is also higher than the average rate of real GDP growth achieved in the 1990s of about 2.9 per cent. The required increase in the medium-term trend rate of growth is large enough to require a major change in the overall policy mix. This chapter argues that Keynesian policies can increase the growth rate by the required amount, but that it will not be easy and will entail some cost, in the form of higher taxation, to those already employed or receiving a comfortable income from rent, interest or dividends.
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© 2016 Joseph Halevi, G. C. Harcourt, Peter Kriesler and J. W. Nevile
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Nevile, J.W. (2016). Can Keynesian Policies Stimulate Growth in Output and Employment?. In: Post-Keynesian Essays from Down Under Volume II: Essays on Policy and Applied Economics. Palgrave Macmillan, London. https://doi.org/10.1057/9781137475350_13
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DOI: https://doi.org/10.1057/9781137475350_13
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