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The meaning of an inflation crisis: steel, Enron, and macroeconomic policy

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  • WESLEY W. WIDMAIER

Abstract

How do crises shape policy possibilities? While some scholars cast crises as material shocks, this paper offers a Post Keynesian or constructivist theory of crises as events that agents interpret. It contrasts opposing Galbraithian and classical interpretations of the 1962 steel crisis and the 2000-2001 California energy crisis. Whereas Galbraithian interpretations of the former stressed abuses of market power and legitimated wage-price guideposts, classical interpretations of the latter stressed regulatory excesses and delayed the imposition of price caps. This paper concludes that the absence of wage-price guidelines compelled the post-1970s use of austerity to limit inflation, explaining reduced U.S. growth.

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  • Wesley W. Widmaier, 2005. "The meaning of an inflation crisis: steel, Enron, and macroeconomic policy," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 27(4), pages 555-573.
  • Handle: RePEc:mes:postke:v:27:y:2005:i:4:p:555-573
    DOI: 10.1080/01603477.2005.11051461
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    Cited by:

    1. Alexandre Chirat & Basile Clerc, 2023. "Convergence on inflation and divergence on price-control among Post-Keynesian pioneers: insights from Galbraith and Lerner," EconomiX Working Papers 2023-4, University of Paris Nanterre, EconomiX.

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