ABSTRACT
The ultimate unravelling of the 1982-91 TWEP was caused, in large part, by the combination of an unsustainable property price ‘bubble’, a substantial outflow of direct investment leading to capacity constraints for domestic industry, together with the inflationary consequences of high excess profits. In short, the synthesis of neo-liberal policy solutions, together with the remains of the post-Keynesian RehnMeidner model, proved to be unsustainable in the medium-term. In addition, the inability of a minority SAP government to get parliamentary support for the timely introduction of an austerity package, designed to reduce the build-up of inflationary pressure on the economy, worsened the over heating.
