October 20, 2016 | Working Paper
  • Type of publication: Working Paper
  • Research or In The Media: Research
  • Research Area: Finance, Jobs & Macroeconomics
  • Publication Date: 2016-10-20
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  • Authors:
    • Add Authors: Thomas I. Palley
  • Show in Front Page Modules: Yes

Abstract
This paper explores lock-in and lock-out via economic policy. It argues policy decisions may near-irrevocably change the economy’s structure, thereby changing its performance. That causes changed economic outcomes concerning distribution of wealth, income and power, which in turn induces locked-in changes in political outcomes. That is a different way of thinking about policy compared to conventional macroeconomic stabilization theory. The latter treats policy as a dial which is dialed up or down, depending on the economy’s state. Lock-in policy is illustrated by the euro, globalization, and the neoliberal policy experiment.

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