Could Lloyd George Have Done It? The Pledge Re-examined

Kent Matthews

Oxford Economic Papers, 1989, vol. 41, issue 2, 374-407

Abstract: This paper sets out to examine the question posed by J. M. Keynes and H. Henderson in 1929--Can Lloyd George do it? Stated badly, could a monetary-financed, expansionary fiscal policy have pulled Britain out of the depression of the 1930s and have reduced unemployment permanently? This question is examined with the aid of the Liverpool Macroeconomic Model estimated for the interwar period. The model incorporates stock-flow equilibrium, rational expectations, and an explicit supply side. It is concluded that, since the money value of unemployment benefits was determined independently of the price level, Lloyd George could indeed have done it. Copyright 1989 by Royal Economic Society.

Date: 1989
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