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A Bright Future Can Be Ours! Macroeconomic Policy for Non-Euro-Zone Western Countries


  • John Nevile

    (School of Economics, University of New South Wales)

  • Peter Kriesler

    (School of Economics, University of New South Wales)


Radical changes in macroeconomic policy could produce a brighter future. The neoclassical myth that a free-market economy inevitably moves to an equilibrium position determined solely by supply-side factors must be rejected and replaced by the insight that the position of an economy in the longer-run is path-dependent. Fiscal policy in recessions should be biased towards increasing physical and human capital which will improve the productivity of an economy, raising living standards and hence taxable capacity, thus enabling future public debt to be reduced if this is desirable. Monetary policy should play a very minor role in aggregate demand policy, with interest rate settings largely used to help achieve long-term income distribution goals. All this is fundamental to Geoff Harcourt’s vision of macroeconomic policy and this paper spells out how this vision can be implemented in 2012 in Western countries not hamstrung by Euro-zone rules and regulations.

Suggested Citation

  • John Nevile & Peter Kriesler, 2012. "A Bright Future Can Be Ours! Macroeconomic Policy for Non-Euro-Zone Western Countries," Discussion Papers 2012-28, School of Economics, The University of New South Wales.
  • Handle: RePEc:swe:wpaper:2012-28

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    References listed on IDEAS

    1. Carmen M. Reinhart & Kenneth S. Rogoff, 2011. "The Forgotten History of Domestic Debt," Economic Journal, Royal Economic Society, vol. 121(552), pages 319-350, May.
    2. J.W. Nevile & Peter Kriesler, 2008. "Expectations and Unemployment," Chapters,in: Keynes and Macroeconomics After 70 Years, chapter 19 Edward Elgar Publishing.
    3. Thomas Palley, 2007. "Asset-based Reserve Requirements: A Response," Review of Political Economy, Taylor & Francis Journals, vol. 19(4), pages 575-578.
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    Cited by:

    1. Eva Lajtkepová, 2016. "Differences And Similarities In The Indebtedness Of Eu Member States After Last Financial Crisis," Oeconomia Copernicana, Institute of Economic Research, vol. 7(4), pages 551-563, December.

    More about this item


    macroeconomic policy; cyclical fluctuations; money and interest; monetary policy; fiscal policy.;

    JEL classification:

    • E00 - Macroeconomics and Monetary Economics - - General - - - General
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy

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