Inflation and the Keynesianism of Restraint
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in Keynes’ General Theory there was a conceptual framework providing a means of communication between me and my colleagues in the Bank, between the Bank and the Government and its Treasury advisers, and between the Bank and its principal clients in the private banks. It was one of the attractive features of the Keynesian analysis that it seemed to by-pass the most divisive issues within our society. It seemed in everybody’s interest that expenditure should be pitched at levels adequate to sustain business activity reasonably close to capacity and so to maintain high levels of employment, while avoiding inflationary pressures. (Coombs, 1981a, p. 146)
KeywordsMonetary Policy Price Level Fiscal Policy Real Wage Aggregate Demand
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