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Major RecessionsBritain and the World 1920-1995$
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Christopher Dow

Print publication date: 2000

Print ISBN-13: 9780199241231

Published to Oxford Scholarship Online: November 2003

DOI: 10.1093/0199241236.001.0001

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Are Recurrent Major Recessions Inevitable?

Are Recurrent Major Recessions Inevitable?

(p.414) 12 Are Recurrent Major Recessions Inevitable?
Major Recessions

Christopher Dow

Oxford University Press

Previous chapters of this book have sought to explain why the major recessions of the twentieth century occurred; this chapter tries to answer the question of whether recurrent major recessions are inevitable, or whether there are steps that governments (or central banks) can take to avoid or mitigate them. The questions involved extend beyond those dealt with earlier, and raise not only the disputable issues of economic theory but also many new ones, including broadly political questions. Section 12.1 deals with background issues, attributing a degree of effectiveness to policy, and recapitulating this and other respects in which the author's view differs from a neoclassical view; the general limits to state action are then discussed, and finally a view is set out about inflation. Section 12.2 deals with general questions about the instruments of economic policy; despite the waves of deconstruction that are generally taken to have destroyed the intellectual foundations for a Keynesian fiscal policy, the author sees a theoretical case for it––along with severe practical limits that stem from the reactions of financial markets to government borrowing; the section goes on to discuss the effect and role of monetary policy. Section 12.3 turns to practical possibilities, and considers the kind of action that, despite the above constraints presented, ought to be possible; Sect. 12.4 then assesses the likelihood that governments will avoid or minimize major recessions in the future.

Keywords:   economic policy, financial markets, fiscal policy, government borrowing, inevitability, inflation, Keynesian fiscal policy, mitigation, monetary policy, neoclassical economics, recession, state action

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