the last years of the 1970s onwards without there being any very marked difference between the performance of the two Control Runs. The unemployment percentage remains somewhat above the target level of 3.76 per cent after 1977 in both cases. This is to be expected for the following reason. In so far as the Money GDP excluding North Sea oil is successfully kept on its target growth path of 13 per cent per annum and far as the proportion of the national income going to wages remains : Keynesian policies had been in operation this shift to profit would not occurred. (See note t at end of chapter.) Otherwise the unamended operation of these policies in this period would have had undesirable consequences. Figure VIII.3 shows movements in the balance of payments on current

doi:10.4324/9780203814628-109

Chapter

the last years of the 1970s onwards without there being any very marked difference between the performance of the two Control Runs. The unemployment percentage remains somewhat above the target level of 3.76 per cent after 1977 in both cases. This is to be expected for the following reason. In so far as the Money GDP excluding North Sea oil is successfully kept on its target growth path of 13 per cent per annum and far as the proportion of the national income going to wages remains

Chapter

ABSTRACT

A double moral can be drawn from this story: first, it is of extreme importance to a country that is so exposed as is the UK to world trading conditions that there should be international co-operation in the formulation of New Keynesian or other equally effective policies for the avoidance of slump conditions; and second, in the absence of such co-operation, effective action by one country such as the UK to avoid its own domestic slump depends upon the ability to finance a temporary but large balance of payments deficit if open trading relations with the rest of the world are to be preserved.