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The Macroeconomics of Industrial Strategy

  • Philip Arestis

    (The Jerome Levy Economics Institute)

  • Malcolm Sawyer

    (The Jerome Levy Economics Institute)

This paper explores some of the links between macroeconomic policy and industrial strategy. The perspective of the present paper is to emphasis the role of the output and investment activities of enterprises rather than the general focus on the labour market in the determination of economic performance. We have explore this aspect in some detail in connection with the inflation barrier, and argue that such a barrier should be viewed in terms of a lack of capacity. We briefly review the balance of trade constraint on growth and employment. The over-all implications of those two sets of analyses is that macroeconomic performance would be enhanced by appropriate industrial strategy, and that inappropriate macroeconomic policies will damage industrial performance. Policies designed to restrain inflation by lowering the level of aggregate demand will tend to depress investment and harm capacity. Improved industrial performance requires a climate conducive to investment and research and development, which in turn depends on, inter alia, high and stable levels of aggregate demand.

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File URL: http://128.118.178.162/eps/mac/papers/9808/9808002.pdf
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Paper provided by EconWPA in its series Macroeconomics with number 9808002.

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Length: 22 pages
Date of creation: 11 Aug 1998
Date of revision:
Handle: RePEc:wpa:wuwpma:9808002
Note: Type of Document - Acrobat PDF; prepared on IBM PC - PC; to print on PostScript; pages: 22; figures: included
Contact details of provider: Web page: http://128.118.178.162

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  1. J. S. L. McCombie & A. P. Thirlwall, 1997. "The Dynamic Harrod Foreign Trade Multiplier and the Demand-orientated Approach to Economic Growth: an Evaluation," International Review of Applied Economics, Taylor & Francis Journals, vol. 11(1), pages 5-26.
  2. Dixon, H. & Rankin, N., 1991. "Imperfect Competition and Macroeconomics: a Survey," The Warwick Economics Research Paper Series (TWERPS) 387, University of Warwick, Department of Economics.
  3. Kaldor, Nicholas, 1972. "The Irrelevance of Equilibrium Economics," Economic Journal, Royal Economic Society, vol. 82(328), pages 1237-55, December.
  4. Philip Arestis & Iris Biefang-Frisancho Mariscal, 1997. "Conflict, Effort and Capital Stock in UK Wage Determination," Empirica, Springer, vol. 24(3), pages 179-193, October.
  5. Philip Arestis & Peter Skott, 1993. "Conflict, Wage Determination, and Hysteresis in U.K. Wage Determination," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 15(3), pages 365-386, April.
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