Keynes, Employment Policy and the Question of Public Debt

Tony Aspromourgos

Review of Political Economy, 2014, vol. 26, issue 4, 574-593

Abstract: This article provides a simple formalization of income-expenditure equilibrium in accordance with the Principle of Effective Demand, but augmented to explicitly incorporate public debt. This is utilized to explore the conditions required for simultaneous achievement of full-employment growth and a sustainable public debt trajectory-the latter understood as stabilization of the ratio of public debt to aggregate income, at some desired level. In the spirit of Keynes's economics, demand-led, full-employment growth, driven by government spending, is reconciled with public debt sustainability so understood. The policy implications, illustrative of Keynes's policy views, are then drawn out.

Date: 2014
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DOI: 10.1080/09538259.2014.938440

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