Cost-Determined and Demand-Determined Prices: Lessons for the Industrialised World from Development Economics

Citation

Ghosh D & Ruziev K (2008) Cost-Determined and Demand-Determined Prices: Lessons for the Industrialised World from Development Economics. Stirling Economics Discussion Paper, 2008-22.

Abstract
In labour surplus developing countries a strategy based on the application of the Keynesian multiplier to generate employment is constrained by the availability of resources. In some of Keynes’s writings in general and those on the post-War employment and commodity policy in particular it seems that Keynes himself became aware of the limitation of the savings investment multiplier in generating and maintaining full employment in industrialized economies. The paper argues that the time has now arrived for the economic policy makers to wake up to the limitations of expansionary fiscal and monetary policy alone to combat the current downturn in economic activities.

Keywords
wage goods; Commod Control; employment; fix-price; flex-price; Bretton Woods

JEL codes

• E12: General Aggregative Models: Keynes; Keynesian; Post-Keynesian
• E24: Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
• E32: Business Fluctuations; Cycles
• F01: Global Outlook
• F53: International Agreements and Observance; International Organizations