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Keynes, Employment Policy and the Question of Public Debt

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  • Tony Aspromourgos

Abstract

This article provides a simple formalization of income-expenditure equilibrium in accordance with the Principle of Effective Demand, but augmented to explicitly incorporate public debt. This is utilized to explore the conditions required for simultaneous achievement of full-employment growth and a sustainable public debt trajectory-the latter understood as stabilization of the ratio of public debt to aggregate income, at some desired level. In the spirit of Keynes's economics, demand-led, full-employment growth, driven by government spending, is reconciled with public debt sustainability so understood. The policy implications, illustrative of Keynes's policy views, are then drawn out.

Suggested Citation

  • Tony Aspromourgos, 2014. "Keynes, Employment Policy and the Question of Public Debt," Review of Political Economy, Taylor & Francis Journals, vol. 26(4), pages 574-593, October.
    • Handle: RePEc:taf:revpoe:v:26:y:2014:i:4:p:574-593
    DOI: 10.1080/09538259.2014.938440
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    1. David C. Colander & Harry Landreth (ed.), 1996. "The Coming Of Keynesianism To America," Books, Edward Elgar Publishing, number 451.
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    Cited by:

    1. Tony Aspromourgos, 2019. "The Past and Future of Keynesian Economics: A Review Essay," History of Economics Review, Taylor & Francis Journals, vol. 72(1), pages 59-78, January.
    2. Smith, Matthew, 2018. "Demand-Led Growth Theory in a Classical Framework: Its Superiority, Its Limitations, and Its Explanatory Power," Centro Sraffa Working Papers CSWP29, Centro di Ricerche e Documentazione "Piero Sraffa".
    3. Stefano di Bucchianico, 2019. "A bit of Keynesian debt-to-GDP arithmetic for deficit-capped countries," Bulletin of Political Economy, Bulletin of Political Economy, vol. 13(1), pages 55-83, June.

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