Full Employment, Open Economy Macroeconomics, and Keynes' General Theory: Does the Swan Diagram Suffice?

Paul Davidson

No 35, Working Papers Series from Institute for New Economic Thinking

Abstract: This paper provides critical comments on the Peter Temin - David Vines promotion of the basic Swan Diagram as (1) a policy tool to encourage any individual debtor nation experiencing balance of payment deficits to reduce its exchange rate in order to expand exports and reduce with Keynes's analysis. Instead Keynes advocated that the onus should be placed on creditor nations to correct international payments imbalances and thereby promote economic expansion internationally. Keynes warned against any deficit nation adopting a policy that tries to achieve a balance in its international payments by following any policy designed to reduce imports and increase exports. Such a policy sends a contractionary force onto the international economy and tends to injure all trading partners.

Keywords: Swan Diagram; balance of payments; fiscal policy; neoclassical Synthesis; Keynesianism; Post Keynesianism. (search for similar items in EconPapers)
JEL-codes: B3 E12 E42 E61 F33 F41 (search for similar items in EconPapers)
Pages: 66 pages
Date: 2016-03
New Economics Papers: this item is included in nep-hpe, nep-mac, nep-opm and nep-pke
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Persistent link: https://EconPapers.repec.org/RePEc:thk:wpaper:35

DOI: 10.2139/ssrn.2735590

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