Crossref Citations
This article has been cited by the following publications. This list is generated based on data provided by Crossref.
Lutz, James M.
2000.
Import Propensities of Industrialized Countries.
p.
9.
Article contents
The New Cambridge Economic Policy: A Critique of its Prescriptions
Published online by Cambridge University Press: 28 March 2014
Extract
THE NEW CAMBRIDGE OR CAMBRIDGE ECONOMIC POLICY GROUP, (CEPG) School led by Professor Wynne Godley has received considerable attention in this country. Its policy prescriptions however are international as well as national. It is well known that it calls at regular intervals for comprehensive long-term import controls and reflation in the UK. It is less well known, and indeed a more recent occurrence, that it calls for ‘co-ordinated’ international trade - i.e. import controls for each country administered centrally by some body such as the OECD - and reflation. As protectionist pressures continue to grow throughout Europe and in the USA, the appeal of New Cambridge analysis may grow with it. We should therefore be aware of the nature of the arguments which it deploys in the attempt to make protection respectable.
- Type
- Article
- Information
- Copyright
- Copyright © Government and Opposition Ltd 1982
References
1 See in general the Cambridge Economic Policy Group Annual Review, 1975–81, Gower Press, London, and W. A. H. Godley and M. J. Featherstone, ‘‘New Cambridge’ Macroeconomics and Global Monetarism: Some issues in the Conduct of UK Economic Policy’, Camegie‐Rochester Series 9, 1978.
2 Sargan, J. D., ‘Wages and Prices in the United Kingdom: A Study in Econometric Methodology’ in Hart, P. E., Mills, G. and Whittaker, J. K. (eds), Econometric Analysis for National Planning, London, Butterworths, 1964.Google Scholar
3 Henry, S. G. B., Sawyer, M. C. and Smith, P., ‘Models of Inflation in the United Kingdom’, National Institute Economic Review, 1975.Google Scholar
4 Pesaran, M. H. and Deaton, A. S., ‘Testing Non‐Nested Nonlinear Regression Models’, Econometrica, Vol. 46, No. 3, 1978, pp. 671 ff.CrossRefGoogle Scholar
5 Kuhn, T. S., The Structure of Scientific Revolution, 2nd edition, University of Chicago, 1970.Google Scholar
6 Lakatos, I., ‘Falsification and the Methodology of Scientific Research Programmes’, in Lakatos, I. and Musgrave, A. E. (eds), Criticism and the Growth of Knowledge, Cambridge University Press, 1970, pp. 91–196.CrossRefGoogle Scholar
7 Laidler, D. W. and Parkin, J. M., ‘Inflation: A Survey’, Economic Journal, Vol. 82, 1975.Google Scholar
8 McCallum, B. T., ‘Rational Expectations and the Natural Rate Hypothesis: Some Evidence for the United Kingdom’, Manchester School, 1975 Google Scholar.
9 A. P. L. Minford, ‘Labour Market Equilibrium in an Open Economy’, SSRC Working Paper No. 8103, University of Liverpool, 1981.
10 J. Bispham, ‘‘The New Cambridge’ and “Monetarist” Criticisms of “conventional” Economic Policy‐making’, National Institute Economic Review, November 1975.
11 K. A. Chrystal, ‘The “New Cambridge” Aggregate Expenditure Function’, Journal of Monetary Economics, May 1981.
12 Cripps, F. W.and Godley, W., ‘A Formal Analysis of the Cambridge Economic Policy Group Model,’ Economics, Vol. 43, 1976, pp. 335–48.Google Scholar
13 J. Tobin, ‘A General Equilibrium Approach to Monetary Theory’, Journal of Money, Credit and Banking, 1969.
14 A. P. L. Minford, ‘Rational Expectations Model of the UK under Fixed and Floating Exchange Rates’, Carnegie‐Rochester Series 12, 1980.
15 A. P. L. Minford, ‘Labour Market Equilibrium in an Open Economy’, SSRC Working Paper No. 8103, University of Liverpool, 1981.
16 Benjamin, D. K. and Kochin, L., ‘Searching for an Explanation of Unemployment in Inter‐War Britain’, Journal of Political Economy 87, No. 3, 1979, pp. 441–478.CrossRefGoogle Scholar
17 See Batchelor, R. A. and Minford, A. P. L., ‘Import Controls and Devaluation as Medium Term Policies’ in On How to Cope with Britain's Trade Position, Corbet, H. et al., Trade Policy Research Centre, London, 1977 Google Scholar.
Occasionally the CEPG claim as an additional benefit that import controls would have a favourable effect on the terms of trade (the prices of our imports relative to the prices of our exports), quite apart from their general macroeconomic effect discussed in the text. In so doing they would be assuming that a fall in our demand for imports and a rise in our supply of exports would be significant enough in the world market for the types of goods we export and import to alter their world prices. Such an assumption could well be valid in which case their claim would be correct and would be an example of the famous classical ‘optimum tariff’ argument whereby tariffs are used to exploit a monopoly type of advantage in trade. However, the problem with such an optimum tariff lies precisely in the dangers of retaliation and trade warfare. It turns out that if there is retaliation, it may be possible for some (i. e. those with the strongest monopoly power) of the warring parties to be better off than with free trade at the expense of the others, but that in total all will be worse off. It will always pay the losers to bribe the winners back to free trade Now if you are one of the potential winners, it could be worth playing for the ultimate bribe. But it is highly unlikely that Britain with its 10 per cent share of world trade has sufficient monopoly power to be in this situation; certainly no one, including the CEPG, has demonstrated to the contrary.
18 See e. g. Friedman, M. and Schwarz, A. J., A Monetary History of the United States, 1867–1960, Princeton University Press, (for NBER), 1963;Google Scholar Cagan, P., ‘The Monetary Dynamics of Hyper‐Inflation’, in Friedman, M. (ed.) Studies in the Quantity Theory of Money, University of Chicago, 1956.Google Scholar
- 1
- Cited by