Cycles, Growth and Structural Change (Routledge Siena by Lionello F Punzo

By Lionello F Punzo

This quantity gathers jointly key new contributions just about the connection, either empirical and theoretical, among financial oscillations, development and structural swap. making use of a worldly point of mathematical modelling, the gathering comprises articles from, among others, William Baumol, Katsuhito Iwai and William Brock.

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Extra info for Cycles, Growth and Structural Change (Routledge Siena Studies in Political Economy)

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Theoretical discussions that have sought to explain a universal stylised fact are, thus, misleading. The evidence raises a number of theoretical and empirical questions that need to be considered further. For example, pro-cyclical price–output fluctuations arise in the inter-war and in some phases of the post-1973 epoch; both of these phases are periods of monetary policy discretion and unsettled exchange rate experiences. In contrast during the classical gold standard period and the Bretton Woods era the leading economies sustained fixed exchange rates, limiting national policy discretion.

The inter-war era saw an abrupt end of many of these adjustment out- 16 Solomos Solomou lets. Legislation in the New World prevented mass emigration as a solution to mass unemployment. The disintegration of world trade, partly due to protection policies and a collapse of overseas investment during 1928–38, prevented export growth from stabilising the effect of domestic demand shocks. Instead, severe business cycle shocks left economies with high unemployment and low output levels. The ‘passing of the Kuznets cycle’ (Abramovitz, 1968) in the inter-war era is of central importance to business cycle experiences, just as the presence of Kuznets swings before 1914 represented the workings of various stabilising cyclical adjustment mechanisms in the international economy.

1). The standard deviation for the post-war period is, however, inflated by the fall of growth rate in the early 1970s. 7 per cent for the pre-war period. Why was the post-war Japanese economy more stable than the pre-war economy? It is an interesting question. But in this chapter, I simply draw attention to this important fact, and focus on the post-war period. A good general reference for the post-war Japanese economy is Nakamura (1981). The Japanese economy started from ashes after the Second World War.

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