First published in 1983, this is the second of two volumes on the causes and cure of stagflation - that combination of mass unemployment and rapid inflation that is currently afflicting the mixed economies of the industrially developed world. The authors deplore the unemployment due to the failure of governments to adopt Keynesian measures for the expansion of economic activity, but recognise that in present conditions such measures would lead to an unacceptable and explosive inflation of money wages and prices. They therefore advocate a dual strategy of financial policies for a steady expansion of total money incomes combined with individual wage rates set at levels to promote employment. The book is of importance for all those concerned with macroeconomic theory and policy. The description of the meaning of a New Keynesian policy and of the arguments for it have been written in a way which should be intelligible to policy-makers and students, and not only to economists with technical training. Professional macroeconomists will be interested not only in these sections but also in the fully specified macroeconomic model used to analyse New Keynesian policies in economic terms and to carry out a counterfactual re-running of history. In addition, the unusually detailed exposition of the application of control techniques to a difficult multivariable control problem also makes the book of interest to control engineers who wish to acquaint themselves with recent generalisations of classical frequency response methods.

Part One Part One The Policy in Theory and Practice; Chapter 1 CHAPTER I Introduction; Chapter 2 CHAPTER II The Case for New Keynesian Demand Management; Chapter 3 CHAPTER III Three Financial Targets: Money Income, Balance of Payments and Investment Ratio; Chapter 4 CHAPTER IV Three Financial Weapons: Fiscal, Monetary and Foreign-Exchange Measures; Chapter 5 CHAPTER V The Marriage of Weapons and Targets; Chapter 6 CHAPTER VI Discretionary Interventions; Part two Part Two Rerunning History; Chapter 7 CHAPTER VII The Formulation and Historical Application of the Control Rules; Chapter 8 CHAPTER VIII Results of the Rerun; Part three Part Three Some Administrative Problems of Fiscal Control; Chapter 9 CHAPTER IX The Use of Indirect Taxes as a Regulator; Chapter 10 Chapter X The Use of Income Tax as a Regulator; Chapter 11 CHAPTER XI The Use of a Wages Tax as a Regulator; Part four Part Four The Derivation of Control Rules for Economic Policy; Chapter 12 CHAPTER XII Feedback Systems and Economic Policies; Chapter 13 CHAPTER XIII Frequency-Response Methods for Policy Design; Chapter 14 CHAPTER XIV The Design and Performance of New Keynesian Policies; APPENDIX A The Economic Model; APPENDIX B The Policy Rules Discussed in Chapter XIV; References Index;