Kau mann, Hugo M.
A icle
In e na ional S ag la ion and he 'Locomo i e Hypo hesis'
K edi und Kapi al
P o ided in Coope a ion wi h:
Duncke & Humblo , Be lin
Sugges ed Ci a ion: Kau mann, Hugo M. (1982) : In e na ional S ag la ion and he 'Locomo i e
Hypo hesis', K edi und Kapi al, ISSN 0023-4591, Duncke & Humblo , Be lin, Vol. 15, Iss. 2, pp.
227-250,
h ps://doi.o g/10.3790/ccm.15.2.227
This Ve sion is a ailable a :
h ps://hdl.handle.ne /10419/292925
S anda d-Nu zungsbedingungen:
Die Dokumen e au EconS o dü en zu eigenen wissenscha lichen
Zwecken und zum P i a geb auch gespeiche und kopie we den.
Sie dü en die Dokumen e nich ü ö en liche ode komme zielle
Zwecke e iel äl igen, ö en lich auss ellen, ö en lich zugänglich
machen, e eiben ode ande wei ig nu zen.
So e n die Ve asse die Dokumen e un e Open-Con en -Lizenzen
(insbesonde e CC-Lizenzen) zu Ve ügung ges ell haben soll en,
gel en abweichend on diesen Nu zungsbedingungen die in de do
genann en Lizenz gewäh en Nu zungs ech e.
Te ms o use:
Documen s in EconS o may be sa ed and copied o you pe sonal
and schola ly pu poses.
You a e no o copy documen s o public o comme cial pu poses, o
exhibi he documen s publicly, o make hem publicly a ailable on he
in e ne , o o dis ibu e o o he wise use he documen s in public.
I he documen s ha e been made a ailable unde an Open Con en
Licence (especially C ea i e Commons Licences), you may exe cise
u he usage igh s as speci ied in he indica ed licence.
h ps://c ea i ecommons.o g/licenses/by/4.0/
In e na ional S ag la ion
and he 'Locomo i e Hypo hesis'
By Hugo M. Kau mann, New Yo k
I. In oduc ion
A e he 1973/74 oil shock, he down u n and hen he eco e y a es
o economic ac i i y among he wes e n indus ialized coun ies (among
which Japan is con en ionally included) p oceeded along di e en
pa hs. In an a emp o accele a e eco e y and dis ibu e g ow h mo e
e enly among coun ies, he 'locomo i e' hypo hesis was p omo ed. The
idea was ha he s onge coun ies would engage in in ensi ied ex-
pansiona y economic policies he eby pulling he mo e slowly g owing
o s agna ing coun ies along wi h hem.
Cu en economic de elopmen s a e eminiscen o he i s oil shock.
This jus i ies u he discussion and illumina ion o he locomo i e
a gumen . Rising in la ion a es in he wes e n indus ialized na ions,
combined wi h and pa ly caused by uel p ice inc eases, as well as
inc eases in he p ices o o he aw ma e ials aise he dis inc possibili-
y, i no p obabili y, ha he ecession which he Uni ed S a es ex-
pe ienced in he i s hal o 1980 may no ye ha e been ully
anquished and ha a wo ld-wide ecession will de elop in 1981. The
spec e has become isible, e en hough he combina ion o ecession
wi h in la ion — he so-called s ag la ion — migh u n ou o be less
se e e and o sho e du a ion han he down u n expe ienced a e
he oil shock o 1973. The 1974/75 in e na ional ecession, he wo s in
he pos -Wo ld Wa II pe iod, came in he wake o OPEC's quad upling
o he oil p ice wi hin a e y sho ime span, and his a a ime when
he unde lying s eng h o he economies was al eady ading. While he
mo e ecen p ice inc eases, amoun ing o abou 150 pe cen so a ha e
no ye been o he same magni ude, his ac alone is no gua an ee
ha he e ec will be less se e e. Fo he base om which he p ice
hikes ha e aken o is subs an ially abo e he o me one. Secondly,
in la ion and unemploymen a es a e wo se now han in 1973. Thi dly,
OPEN ACCESS | Licensed unde CC BY 4.0 | h ps://c ea i ecommons.o g/abou /cclicenses/
DOI h ps://doi.o g/10.3790/ccm.15.2.227 | Gene a ed on 2023-01-16 12:47:38
228 Hugo M. Kau mann
uel supply has become a he mo e uns able in spi e, o e en because
o highe uel p ices, and supplies may become e e mo e unp edic -
able as a consequence o poli ical and ecomomic ins abili y wi hin
OPEC. And las bu no leas , mo e p ice inc eases and possible cu -
backs in supply a e pending.1
Business cycle his o y and heo y ins uc us ha no wo cycles a e
iden ical in hei causa ion, ampli ude o du a ion. This obse a ion
pe ains bo h o cycles which emain con ined wi hin a na ion and o
hose which c oss na ional bounda ies. Thus, we need no en ision he
ine i abili y o a epea pe o mance o he p e ious ecession.
Simila i ies wi h he onse o he p e ious down u n do exis , such
as he apid inc ease in impo p ices and de e io a ion in he e ms
o ade o indus ialized na ions. Bu some o he dissimila i ies wi h
he p e ious peak o he cyclical expansion may be cause o mo e
a he han less conce n. The ex e nal disequilib ia, i.e., balance-o -
paymen s imbalances among he wes e n indus ialized na ions, a e
dis ibu ed di e en ly om wha hey we e a he onse o he las
ecession. Howe e , he in e na ional disequilib ia — in la iona y p es-
su es and unemploymen — a e mo e p onounced nowadays. In he
mon hs p eceding he down u n in he 1970s, in la iona y p essu es
had been combined wi h high employmen and capaci y u iliza ion
le els in an in e na ionally synch onized expansion. This ime, howe e ,
unemploymen is s ill a uncom o ably high le els in many coun ies,
and capaci y u iliza ion seems o be below no mal, g ow h a es ha e
d opped subs an ially om hei le el du ing he decade an eda ing
he i s oil shock, while in la ion has been accele a ing.
A i s blush, one migh conclude ha he p e ious gene al down-
u n was accompanied by a policy dilemma o in e nal e sus ex e nal
goals — how o lowe he unemploymen a e unde se e e balance-o -
paymen s cons ain s — while we a e now aced wi h an in e nal policy
dilemma in he coun ies a lic ed wi h high in la ion and unemploy-
men a es. Howe e , his di e ence be ween he wo pe iods is mo e
appa en han eal, o wo easons: i s , we ha e lea ned, o should
ha e lea ned, om obse a ions o he pas ha he in la ion-unem-
ploymen ade-o p esen s i sel o policy make s unde e y limi ed
p e-condi ions, and hen only in he sho un. Secondly, wi h in la ion
a es di e ging a an accele a ing a e, we can expec belance-o -pay-
1 The OECD es ima es ha he ini ial impac o each 10 pe cen inc ease
in oil p ices educes he g ow h in GNP by 0.3 pe cen age poin s.
OPEN ACCESS | Licensed unde CC BY 4.0 | h ps://c ea i ecommons.o g/abou /cclicenses/
DOI h ps://doi.o g/10.3790/ccm.15.2.227 | Gene a ed on 2023-01-16 12:47:38
In e na ional S ag la ion and he 'Locomo i e Hypo hesis' 229
men s disequilib ia o moun again, he eby wo sening he ex e nal
policy op ions.
Consequen ly, we ha e o eckon wi h he possibili y ha u u e
p oblems will esemble hose a e he i s oil shock, and ha sug-
ges ions o coping wi h hem will mo e along simila acks. The
In e na ional Mone a y Fund (IMF) p oposed ha "each coun y should
con ibu e o wo ld economic g ow h in ela ion o he s eng h o i s
ex e nal posi ion and o i s p ice pe o mance."2 The O ganiza ion o
Economic Coope a ion and De elopmen (OECD) made simila s a e-
men s in he pas . Bu indi idual coun ies may be emp ed o call o
a di e en pa h o ac ion, assigning he esponsibili y o adjus men
o he so-called locomo i e coun ies, Ge many and Japan.
My p esen a ion ocuses on se e al aspec s o he locomo i e a gu-
men . Fi s , I shall in es iga e he idea i sel and i s ounda ion. Second
I shall ask whe he he a ious heo e ical unde pinnings o his hypo-
hesis we e well aken and whe he he a gumen could be suppo ed in
ligh o he exis ing in e na ional mone a y and exchange a e sys em.
The ques ion whe he he 'locomo i es' could ha e acceded o o he
coun ies' demands in iew o he locomo i es' own in e nal economic
and poli ical cons ain s has been deal wi h on a di e en occasion.3
II. The 'Locomo i e' Hypo hesis
2. The 'Locomo i e9 Hypo hesis Pe Se
Since he oil shock o 1973, he wes e n indus ialized na ions ha e
expe ienced, in he agg ega e, conside ably lowe g ow h a es han
du ing he p eceding en o i een yea s. Coinciding wi h he poo
pe o mance o he g ow h a es, and no un ela ed o i , in e nal im-
balances inc eased: in la ion a es accele a ed conside ably and unem-
ploymen a es se led on a highe pla eau, e en du ing expansiona y
phases, han many coun ies had deemed accep able in he p eceding
decade; employmen g ew, bu p oduc i i y gains d opped sha ply;4
2 IMF, Annual Repo 1979, p. 31.
3 Hugo M. Kau mann, "Ge many's Op ion o be a Mini-Locomo i e: A
Reassessmen o 1977," Economia In e nazionale, 31 (3 - 4), Augus - No embe
1978, pp. 196-211.
4 The o e all gain o he se en majo indus ial coun ies amoun ed o
only 1 -1/2
%>
pe annum om 1973 o 1978, compa ed wi h an a e age
inc ease o 3 - 3/4 pe cen o he 1960 - 1973 pe iod. (P oduc i i y measu ed
by eal GNP pe pe son employed.) IMF, Annual Repo 1979, p. 7. Employ-
men may ha e g own a he expense o p oduc i i y gains.
16 K edi und Kapi al 2/1982
OPEN ACCESS | Licensed unde CC BY 4.0 | h ps://c ea i ecommons.o g/abou /cclicenses/
DOI h ps://doi.o g/10.3790/ccm.15.2.227 | Gene a ed on 2023-01-16 12:47:38
230 Hugo M. Kau mann
and he ex e nal accoun s, measu ed on he cu en accoun basis, ex-
hibi ed g ea e imbalances han be o e. In o he wo ds, in e nal as well
as ex e nal imbalances in he 1970s exceeded hose o he 1960s.
The 1974/75 ecession was synch onized among OECD coun ies, bu
he in e nal-ex e nal disequilib ia we e dis ibu ed unequally among
hem, in he wake o di e en policy esponses o he oil shock. Coun-
ies which we e, o his o ical easons, mo e ea ul o in la ion, e.g.,
Ge many and Swi ze land ( he o me ha ing expe ienced he dis-
as ous consequences o ampan in la ion wice wi hin a qua e
cen u y), concen a ed hei a en ion o he in la iona y e ec o he
oil p ice inc ease. O he s, such as F ance, I aly, he Uni ed Kingdom,
and he Uni ed S a es, we e mo e conce ned abou he de la iona y
impac . Ini ial policy esponses e lec ed na ional p e e ence unc ions.
The o me g oup o coun ies engaged in less accommoda ing mone a y
and iscal policies, mo e o less accep ing OPEC's oil p ice inc eases
o wha hey eally we e — a ans e ax om oil impo ing o oil
expo ing coun ies, equi ing in e coun y income ans e s. As such,
oil p ice inc eases we e bound o ha e some de la iona y e ec s in he
oil impo ing coun ies. The second g oup o coun ies, in hei a emp
a e ading he eal ans e cos , engaged in expansiona y economic
policies, he eby ueling he in la iona y o ces, wi hou ul ima ely
escaping he adjus men bu den imposed by he oil ax. The di e ence
was ha an in la ion ax ("hidden ax") was subs i u ed o an ou igh
admission, bu poli ically less popula s ance, ha an oil ax had been
imposed om he ou side. This la e g oup o coun ies ended up no
me ely wi h g ea e ex e nal imbalances as hey esis ed he equi ed
adjus men s; hei in e nal imbalances g ew wo se as well, as in la ion-
a y dis o ions compounded he adjus men cos s connec ed wi h he
oil ax.
Like he disequilib ia, he adjus men bu den was unequally dis i-
bu ed in he end. I was hus no oo su p ising ha coun ies wi h
la ge disequilib ia and adjus men p oblems, i.e., hose which had
s a ed om an un a o able in e nal-ex e nal posi ion and hose which
engaged in he w ong policy esponse,5 would engage in a campaign
o ge he mo e success ul ones o assume also pa o he adjus men
bu den o he coun ies wi h he la ge disequilib ia.
5 This includes hose which s a ed om ela i ely a o able posi ions,
e. g., he Uni ed S a es, and he no so a o ably posi ioned ones, e. g., I aly
and he Uni ed Kingdom.
OPEN ACCESS | Licensed unde CC BY 4.0 | h ps://c ea i ecommons.o g/abou /cclicenses/
DOI h ps://doi.o g/10.3790/ccm.15.2.227 | Gene a ed on 2023-01-16 12:47:38

In e na ional S ag la ion and he 'Locomo i e Hypo hesis' 231
To p epa e he g ound o his p oposal, coun ies we e classi ied as
'weak' and 's ong' based, wi h dubious jus i ica ion, upon hei ex e nal
accoun posi ions, p ima ily hei ade o cu en accoun balances.
This dicho omy was he ounda ion o he 'locomo i e' hypo hesis, which
he OECD, oo, used in i s ecommenda ions o an i- ecessiona y poli-
cies. Acco dingly, he 's ong' coun ies had he po en ial as well as
he obliga ion o lead he way ou o he ecession, pulling he 'weak'
OECD coun ies in ow. The po en ial was said o be he e, because he
ex e nal su pluses o he locomo i e coun ies allowed hem o conduc
expansiona y economic policies unhampe ed by ex e nal cons ain s.6
Mo eo e , i was supposed o be also in he locomo i e coun ies' e y
own in e es o accele a e domes ic expansion o educe hei in e nal
disequilib ia, i.e., unemploymen ; in la iona y p essu es would no be
ekindled as long as hey ope a ed subs an ially below capaci y limi s.
Pu succinc ly, he p oposal was ha a li le cos o hemsel es, he
's ong' coun ies would no only con ibu e o sol ing he o he s'
economic p oblems, bu could eap subs an ial bene i s hemsel es by
accep ing he locomo i e ole.
2. The Theo e ical F amewo k and I s E alua ion
a) The Theo e ical F amewo k
A he base o he locomo i e a gumen lay he assump ion ha dis-
c e iona y, ac i is go e nmen in e en ion — p ima ily in he o m o
mone a y and iscal policy, bu also o incomes policy, i need be —
would be e icien in achie ing policy goals. The heo e ical amewo k
wi hin which he ad oca es o he locomo i e hypo hesis ope a ed was,
implici ly a he han explici ly, essen ially Keynesian. I consis ed o
ou assump ions: he exis ence o a mul iplie e ec (i no also ac-
cele a o and mul iplie -accele a o in e ac ion); he exis ence o an
in e na ional ansmission mechanism o domes ic economic ac i i y,
i.e., an in e na ional mul iplie , be i ing a sys em o ixed exchange
a es; an en i onmen o money illusion, i.e., o p ice s abili y, whe e
changes in money incomes we e p ecei ed as changes in eal incomes.
Finally, all would all in o p ope place because o he con inued
exis ence o an in la ion-unemploymen ade-o , ha could be ob-
6 As used o be he case wi h England's 's op and go' policies du ing much
o he 1960s.
16*
OPEN ACCESS | Licensed unde CC BY 4.0 | h ps://c ea i ecommons.o g/abou /cclicenses/
DOI h ps://doi.o g/10.3790/ccm.15.2.227 | Gene a ed on 2023-01-16 12:47:38
232 Hugo M. Kau mann
se ed since he la e 19 h cen u y — he so-called Phillips cu e
phenomenon.
Unde hese pe cei ed p econdi ions i became incumben upon he
s onge coun ies o se in o mo ion accele a ed domes ic g ow h by
engaging in expansiona y demand policies. Policy-induced budge a y
de ici s ( iscal policy, he Keynesian policy ool pa excellence) we e
p esc ibed, which we e o be assis ed by accommoda ing mone a y policy.
Wi h his policy-induced accele a ed g ow h he in e na ional mul i-
plie would be igge ed as inc eased domes ic economic ac i i y spilled
o e in o he weake coun ies ia he ma ginal p opensi y o impo .
Consis en wi h Keynesian doc ine was he pe cep ion o cu en
accoun su pluses (de ici s) as e idence o de icien (excessi e) domes ic
abso p ion. Wha seemed o be subs an ial unused p oduc i e capaci y
in su plus coun ies a e 1974, len added suppo o such an in e p e a-
ion o cu en accoun su pluses. Thus, inc eased domes ic abso p ion
would educe excess capaci y in he home coun y and, h ough he
ma ginal p opensi y o impo , educe he ex e nal imbalances o
su plus and de ici coun ies alike. This, in u n, would educe he
ex e nal cons ain s o expansiona y policies in he weake coun ies,
acili a ing hei domes ic eco e y. These coun ies we e p esumed un-
able o engage in expansiona y policies wi hou simul aneously wo sen-
ing hei al eady p eca ious in e nal-in la iona y and ex e nal —
balance o paymen s — posi ion.
b) E alua ion o he Theo e ical F amewo k
(1) E ec i eness o Economic Policy
The assump ion ha (go e nmen al) disc e iona y policies could be
e ec i e has been challenged on se e al on s. The ea lie a ack
cen e ed on he ela i e e iciency o mone a y policy e sus iscal
policy along he lines o mone a is s e sus Keynesians. La e he
ques ion a ose as o hei ela i e e iciency unde a sys em o ixed
(o pegged) exchange a es compa ed o ha unde a egime o lexible
exchange a es. Mo e ecen ly, all o ms o disc e iona y policies came
unde he sc u iny o he ' a ional expec a ions' heo y, acco ding o
which p ope ly an icipa ed policies o he economic au ho i ies ha e no
impac on economic ac i i y.7
7 Fo a con enien summa y o he mo e impo an c i icisms ha ha e
been launched agains he e icacy o ac i is policy measu es, see Robe J.
OPEN ACCESS | Licensed unde CC BY 4.0 | h ps://c ea i ecommons.o g/abou /cclicenses/
DOI h ps://doi.o g/10.3790/ccm.15.2.227 | Gene a ed on 2023-01-16 12:47:38
In e na ional S ag la ion and he 'Locomo i e Hypo hesis' 233
E en wi hou going o he ex eme o he a ional expec a ionis s,
we now know ha he con idence in he success o disc e iona y eco-
nomic policies, he so-called ' ine- uning', p e alen in he ea ly 1960s,
had been o e done and was apidly waning in he la e 1960s. Some o
he doub s in he success o ine- uning had o do wi h he exis ence
and unp edic able a iabili y o ime lags — he inside and ou side
lags — as well as wi h hei impac upon he a iables and hei in-
cidence.8 I became e iden ha he (expansiona y o con ac iona y)
policies migh become e ec i e jus a he ime when opposi e policies
would be called o . Thus, bo h he lags and he a ional expec a ions
a gumen s suppo he ecommenda ion o ely on ules a he han on
ac i is policies.
Mo eo e , i has been shown ha he e is he cons an dange o o e -
shoo ing when — wi h unce ain domes ic and o eign- ade mul iplie s
— expansiona y (con ac iona y) policy is adop ed o close a de-
la iona y (in la iona y) gap.9 I such a dange exis s o he closed
economy, i is e en mo e likely o be p esen in exagg ega ed o m
o he open economy, depending on he exchange a e egime. Unde
ixed exchange a es, his dange o he domes ic economy is educed.
The in e na ional spillo e e ec (which, in he locomo i e a gumen is
desi ed and coun ed upon) mo es in o o he coun ies some o he
'exagge a ions'. Ne e heless, he co ec magni ude and he dis ibu-
ion o he impac o policies be ween he eal and he mone a y sec o s
a e s ill unce ain, and wi h hem he eedback om and upon loco-
mo i e coun ies.
Aside om he sho comings connec ed wi h hese mo e ecen ind-
ings conce ning he e icacy o disc e iona y policies, he e a e o he
Go don, "Wha Can S abiliza ion Policy Achie e?" Ame ican Economic
Re iew, 68 (2), Pape s and P oceedings, May, 1978, pp. 335 - 338.
8 The ecogni ion lag has o be di ided in o wo pa s, he ecogni ion ha ,
say, a down u n has s a ed, and secondly, whe he i is cyclical o s uc u al
in na u e. This is he closed-economy equi alen o he ques ion in in e -
na ional economics whe e balance o paymen s had o be classi ied as
empo a y- andom, cyclical o ' undamen al', unde he B e on Woods
sys em. Only he la e disequilib ium would ha e jus i ied (o equi ed)
exchange a e changes. O cou se, con lic s a ose among coun ies in he
in e p e a ion o hei disequilib ia: wha one coun y saw as i s own andom
o cyclical ex e nal disequilib ium was equen ly seen as ' undamen al' by
he ou side s.
9 William C. B aina d, "Unce ain y and he E ec i eness o Policy,"
Ame ican Economic Re iew 57, May 1967, pp. 411 - 425.
OPEN ACCESS | Licensed unde CC BY 4.0 | h ps://c ea i ecommons.o g/abou /cclicenses/
DOI h ps://doi.o g/10.3790/ccm.15.2.227 | Gene a ed on 2023-01-16 12:47:38
234 Hugo M. Kau mann
undamen al misgi ings one can exp ess wi h he basis o he locomo-
i e hypo hesis. I shall now u n o he mo e signi ican ones.
(2) Money Illusion
I is s ange ha money illusion, which p esupposes a pe iod o p ice
s abili y, was s ill assumed in he mid-1970s. Fo one, he condi ion o
he p eceding decade ha dly wa an s such an assump ion. While we
a e no in he ex eme classical wo ld o pe ec o esigh ega ding
p ice changes, and some money illusion exis s in he sho un, i does
no i he wo ld o he 1970s. Since p ice expec a ions a e o med on
pas p ice pe o mance, in la ion expec a ions a e buil in o he sho
un beha io , oo, a e he lea ning p ocess has occu ed. In la ion ex-
pec a ions a e inco po a ed no only in o m o 'indexing/ bu also in
o he o ms o cos o li ing adjus men s, leap ogging, and by sho en-
ing he du a ion o labo con ac s, o educe he ime lag be ween
p ice changes and wage adjus men s. This being he case, we mo e
u he away om he Keynesian ealm and migh be in he 'long un'
by now. As labo is expec ed o educe i s eal income, he Phillips
cu e phenomenon depends en i ely on labo 's pliabili y.
Ano he eason o money illusion o be a a he cu ious assump ion
in he special si ua ion unde e iew has o do wi h he locomo i e
hypo hesis i sel . I coun ies a e encou aged o s imula e ecomomic
ac i i y e en wi h he likelihood ha he in la ion a es would e-
accele a e, hen money illusion could no longe be coun ed on; he
na ion, and wi h i he con ac ing pa ies, ha e been o ewa ned ha
in la ion which s ill had no been b ough unde con ol, would be e-
kindled — a bes , only sligh ly. The mo e ecen discussion o he
Philipps cu e phenomenon has clea ly es ablished ha he in la ion
unemploymen ade-o , i i e e exis ed as a policy ins umen , was
ope a i e only in he sho un, and as long as p ice s abili y was
assumed by wage ea ne s.
A he me ela ed o he 'Keynesian' ha employmen can be s imula -
ed wi hou much in la iona y impac un il an economy eaches he
capaci y ou pu le el is ha his also holds i espec i e o he speed
wi h which capaci y ou pu is being app oached.10
10 This can be ound in a gumen s o he Join Economic Commi ee, e. g.,
in i s 1976 Economic Repo (pp. 41 - 42) and i s 1976 Mid-Yea Re iew o
he Economy (p. 20), whe e i has been s a ed ha "a a ime when e e y
majo sec o o he economy is ope a ing a below capaci y, apid g ow h
OPEN ACCESS | Licensed unde CC BY 4.0 | h ps://c ea i ecommons.o g/abou /cclicenses/
DOI h ps://doi.o g/10.3790/ccm.15.2.227 | Gene a ed on 2023-01-16 12:47:38
In e na ional S ag la ion and he 'Locomo i e Hypo hesis' 241
The balance o paymen s implica ions o he weake coun ies, how-
e e , we e di e en om he in la iona y ones. Expansiona y policies
by he weake coun ies would u he he p eca iousness o hei ex-
e nal posi ion, inc ease he loss o in e na ional ese es, which may-
ha e been low o begin wi h. This line o easoning dis ega ds one o
he undamen al di e ences be ween a sys em o ixed (o in e mi en -
ly pegged) exchange a es and one in which he balance o paymen s
impac can be abso bed by changes in he exchange a es. Unde he
o me sys em, se e e es ic ions — especially on capi al ansac ions,
bu also on me chandise ade — we e o en in oduced as he balance
o paymen s de ici coun ies los in e na ional ese es o main ain he
pegged exchange a es. Bu a sys em o eely luc ua ing exchange a es
would no encoun e any ese e losses a all. As a ma e o ac ,
ese e changes a e an indica o o he absence o eely loa ing ex-
change a es and o he deg ee o o icial in e en ion.
(6) Exchange Ra e Flexibili y and Policy Op ions
Also o e looked was he po en ial impac o a loa ing exchange a e
sys em upon he locomo i es hemsel es and upon hei in luence on he
weake coun ies. The e seems o be an in e nal inconsis ency in ha ing
locomo i es a ached o a lexible exchange a e sys em: coun ies ha e
op ed o a sys em o g ea e exchange a e lexibli y o gi e he pa i-
cipan s in he loa ing sys em an addi ional deg ee o eedom, i.e., an
added policy ins umen which would be un e e ed by ex e nal-accoun
conside a ions. One can, he e o e, eason ha he decision o add his
ool exp esses a social p e e ence unc ion — he o he op ion being o
pa icipa e in he — hen al eady exis ing — Eu opean Join Floa
Sys em. I am no igno ing he ac ha we a e dealing wi h an ex-
change a e sys em o 'managed' loa a he han wi h one in which
exchange a es a e le o e lec ma ke o ces exclusi ely. Wha does
ma e , howe e , is ha some coun ies — England, F ance, and I aly,
o men ion he majo Wes -Eu opean coun ies only — op ed o loa
independen o he join loa . This loose join loa ag eemen las ed
ill Ma ch 1979, when he Eu opean Mone a y Sys em (EMS) came in o
o ce.
Exchange a e mo emen s unde he loa ing exchange a e sys em
had inc eased he ex e nal alues o he s ong coun ies, hus inc eas-
ing he o eign-cu ency p ices o hei expo ables and dec easing he
Deu sche Ma k (DM), Swiss ank (S .) o yen p ices o impo ables. The
OPEN ACCESS | Licensed unde CC BY 4.0 | h ps://c ea i ecommons.o g/abou /cclicenses/
DOI h ps://doi.o g/10.3790/ccm.15.2.227 | Gene a ed on 2023-01-16 12:47:38

242 Hugo M. Kau mann
exchange a e mo emen , in u n, weakened he s ong coun ies' im-
po -compe ing goods sec o . Mo eo e , he app ecia ion o hei cu en-
cies made hem less compe i i e in hi d ma ke s as well. E en i he
mone a is a gumen is co ec and exchange a e mo emen s ha e no
las ing e ec on ela i e p ices and employmen , bu only on p ice
le els, in he sho un he ou come is di e en . Thus, i he s ong
coun ies' mone a y and iscal au ho i ies engaged in expansiona y
policies beyond he ange chosen by hem in 1976 - 1978, hey migh
ha e o ced he ex e nal alues o hei cu encies down and enhanced
hei in e na ional compe i i e posi ion — a leas in he sho un.
Would his ac ion ha e won he app o al o he weake coun ies?
(7) In e na ional Capi al Mobili y
Mone a y dis u bances and capi al mo emen s which would be se
in o mo ion by hese dis u bances we e as much as igno ed as he loco-
mo i e a gumen concen a ed on he eal sec o . Unde condi ions in
which la ge scale capi al lows a e highly in e es elas ic, and wi h he
exis ence o a well de eloped Eu o-cu ency ma ke , he ailu e o
include he mone a y sec o mus be cu ious — and his no only o
'ex eme mone a is s'. The assumed amewo k would no ha e been
much mo e app op ia e o a sys em o pegged exchange a es, bu
ce ainly was no o he in e na ional mone a y sys em as i e ol ed
since 1973. The ounda ion o a smoo hly unc ioning pegged exchange
a e sys em — i.e., one in which no ade no capi al low ba ie s a e
in oduced me ely o pe pe ua e a ' undamen al disequilib ium' — is
ha he cen al bank ende s o eign cu ency a pe ec subs i u e o
domes ic cu ency on he supply side.24 The nominal money supply be-
comes hus an endogenous a iable, which no longe is unde he policy
con ol o he cen al bank. To inc ease o e-es ablish mone a y con-
ol unde he pegged- a e sys em a a ime o disequilib ium in he
o eign exchange ma ke — when he demand o o eign balances
exceeds wha he mone a y au ho i ies deem desi able o ole able, and
when he cen al bank is losing in e na ionally accep able ese es —
he supply subs i u abili y is discon inued. Ba ie s o exchange con-
e ibili y a e in oduced, i.e., some o m o non-p ice a ioning o main-
ain pegged a es.
24 Th ough i s in e en ion he cen al bank c ea es an in ini ely elas ic
supply o o eign cu ency, i.e., an in ini ely elas ic demand o he home
cu ency.
OPEN ACCESS | Licensed unde CC BY 4.0 | h ps://c ea i ecommons.o g/abou /cclicenses/
DOI h ps://doi.o g/10.3790/ccm.15.2.227 | Gene a ed on 2023-01-16 12:47:38
In e na ional S ag la ion and he 'Locomo i e Hypo hesis' 243
On he o he hand, i seems ha pe ec ly lexible exchange a es do
no gua an ee comple e independence o mone a y policy, whe e cu -
ency subs i u abili y exis s.25 Risk o exchange con ol, o eezing o
o eign-held asse s o hei na ionaliza ion educes he deg ee o subs i-
u abili y o o eign o domes ic asse s. Bu as long as he posi i e isk
di e en ial does no become p ohibi i e, capi al mo emen s canno be
igno ed in policy ecommenda ions.
T ue, in he sho un, whe e s ock analysis o asse s is mo e ap-
p op ia e han low analysis26 and unde pe ec ly lexible exchange
a es and ic ionless ma ke s, po olio disequilib ia (owing o changes
in he eal money supply o in e es a es) would be co ec ed by ex-
change a e changes a he han capi al lows. Bu in he longe un,
capi al lows would ake place. Unless capi al mo emen s a e p ohibi -
ed, we mus expec highe incomes (and hus sa ings) o inc ease de-
mand no only o addi ional domes ic bu also o eign secu i ies.27
The ela i e be e p ice pe o mance in Ge many and Swi ze -
land made he s ong coun ies' cu encies mo e a ac i e as a s o e
o alue; he DM, mo eo e , became also an a ac i e ansac ions cu -
ency. Thus, po olios included asse s in he denomina ion o hose
cu encies.
(8) Coun y Classi ica ion
So a we ha e adop ed he commonly used e ms 's ong' and 'weak'
coun ies, as hey we e ca ego ized by he p oponen s o he locomo i e
hypo hesis. We now ha e o e alua e he alidi y o his coun y
classi ica ion. G a e doub s a ise wi h espec o he classi ica ion o
coun ies in o s ong and weak ones acco ding o hei ex e nal bal-
ances, o which he ade o cu en accoun balance se ed as ya d-
s ick. Bu nei he he ade balance, which is closely linked o he na io-
nal income accoun , no he cu en accoun ansac ions include capi al
mo emen s. Li le in e ence can be d awn om he ade o he cu en
accoun abou a coun y's ex e nal posi ion, and ce ainly no abou i s
25 Ma c A. Miles, "Cu ency Subs i u ion, Flexible Exchange Ra es, and
Mone a y Independence," Ame ican Economic Re iew, 68 (3), June 1978, p.
429.
28 This is so because he ole o domes ically held secu i ies is la ge ela i e
o he low demand o changes in ha s ock. See John B. Bea e, Mac o-
economics: Cycles, G ow h, and Policy in a Mone a y Economy. New Yo k:
Macmillan, 1978, pp. 329 .
27 Bea e, ibid., pp. 328 ., oo no e 23.
OPEN ACCESS | Licensed unde CC BY 4.0 | h ps://c ea i ecommons.o g/abou /cclicenses/
DOI h ps://doi.o g/10.3790/ccm.15.2.227 | Gene a ed on 2023-01-16 12:47:38
244 Hugo M. Kau mann
ela i e s eng h o weakness, ei he o e ime o in compa ison o
o he coun ies, and hus no policy measu es ough o be based o
sugges ed by e e ing o wha migh u n ou o be misleading indica-
o s. Ye ade- o cu en -accoun su plus coun ies ha e been accused
o being 'bad c edi o s' by es aining domes ic demand, hus c ea ing
de ici s in o he coun ies. Implici in his judgmen is he assump ion
ha su plus is an indica ion o unning one's own economy below
p oduc i e capaci y, so ha he size o he su pluses becomes an indica-
o o he po en ial ou pu gap. While cyclical a ia ions a ec he
cu en accoun , o he de e minan s, such as secula changes o changes
in echnology and as e o di e ences in in la ion a es a e o he de-
e minan s; some o hese changes c ea e excess capaci y, while o he s
ha e educed i .
The by now amilia J-cu e phenomenon, acco ding o which e alu-
a ions and app ecia ions (de alua ions and dep ecia ions) i s inc ease
balance o paymen s su pluses (de ici s) u he complica es sho - un
in e p e a ions o balance o paymen s accoun s.
Unde a uly lexible exchange a e sys em, balance o paymen s dis-
equilib ia in he con en ional sense do no occu . The BIS and o he
o icial ins i u ions ea disequilib ia in he same ashion as i hey
had occu ed unde he pegged a e sys em o B e on Woods. Thus, he
BIS concluded ha in e na ional adjus men s o balance o paymen s
de ici coun ies emained as bu densome unde he lexible a e sys em
as i was unde he ixed a e sys em. I dis ega ds he possibili y ha
elimina ion o disequilib ia may dis up he economies o su plus coun-
ies as well, when a cu ency ends o app ecia e oo apidly.
I has been e en claimed ha he e is no eason why a lexible ex-
change a e egime should make he adjus men in he cu en accoun
au oma ic. Such imbalances a e pa and pa cel o a s ock adjus men
p ocess. They e lec he su plus (de ici ) coun ies' desi e o accumula e
(decumula e) a pa icula o m o weal h, namely o eign mone a y
asse s, and as such a e no , pe se, some hing o be condemned o
c i icized, no is he e a need o elimina e hem h ough go e nmen
policies.28
As he 'mone a is ' in e p e a ion o balance o paymen s is di e en
om he Kei/nesian, which emphasizes na ional income, so is he mo-
ne a is in e p e a ion o exchange a e de e mina ion. Concen a ion
28 See Bal enspe ge , "The 1978 Annual Repo ...loc. ci ., p. 434.
OPEN ACCESS | Licensed unde CC BY 4.0 | h ps://c ea i ecommons.o g/abou /cclicenses/
DOI h ps://doi.o g/10.3790/ccm.15.2.227 | Gene a ed on 2023-01-16 12:47:38
In e na ional S ag la ion and he 'Locomo i e Hypo hesis' 245
on cu en accoun disequilib ia o he balance o paymen s be ays he
a achmen o he adi ional app oach acco ding o which exchange
a es a e de e mined by imbalances in he cu en accoun s. Speci ically,
acco ding o he Keynesian in e p e a ion, he sign, magni ude and
pe sis encec o cu en accoun imbalances poin in he di ec ion o
o e - o unde alua ion o a cu ency. Acco ding o he mone a is
app oach, on he o he hand, he cu en accoun is only one o he
de e minan s o exchange a es. To he mone a is , exchange a es a e
de e mined in he ma ke o asse s, denomina ed in a ious na ional
cu encies. Expec a ional ac o s play an impo an ole in he asse
dis ibu ion and wi h i in he demand and supply condi ions o he
a ious cu encies. Cu en accoun su pluses o de ici s, hus, a e
endogenous o he adjus men p ocess and a e de e mined join ly wi h
he exchange a e.
O icial balance o paymen s in e p e a ions ha e gene ally paid no
a en ion o hese in e ac ions be ween he a ious subaccoun s o he
balance o paymen s. In con as o he 1940s und 1950s, when he
capi al accoun was assumed o accommoda e he cu en accoun , he
mode n e sion (e.g., Kou i, Mussa) assumes ha he cu en accoun
adjus s o e ime o he exchange a e which is de e mined in he asse
ma ke . We ha e "a ecu si e in e ac ion o e ime be ween exchange
a es, balance o paymen s, and ne inancial weal h" which a e also
in luenced by exchange a e expec a ions.29
Cu en accoun imbalances in his iew do no 'cause' exchange a e
mo emen s, and hey may no be linked o each o he in a "unique and
unambigous way."30 I his is he case, hen cu en accoun su pluses
no longe a e e idence o unde alued cu encies. On he poli ical plane
wo se s o cha ges, which we e inconsis en wi h each o he , ha e been
le elled a he s ong coun ies: hey ha e been accused o main aining
unde alued cu encies — unning cu en accoun su pluses. Then, as
hei cu encies app ecia ed, hey we e said o d i e he p ice o hei
cu encies up a i icially in o de o ge on he ' i uous' ci cle.
In 1965, he Be ns ein Commi ee had wa ned ha no single balance
o paymen s measu e should be used alone o assess a coun y's in e -
na ional s eng h. This judgmen was la e ea i med by he Ad iso y
29 Assa Lindbeck, "App oaches o Exchange Ra e Analysis — An In o-
duc ion," Scandina ian Jou nal o Economics, 78 (2) 1976, p. 142.
30 Bal enspe ge , "The 1978 Annual Repo ...loc. ci ., pp. 439 - 440.
17 K edi und Kapi al 2/1982
OPEN ACCESS | Licensed unde CC BY 4.0 | h ps://c ea i ecommons.o g/abou /cclicenses/
DOI h ps://doi.o g/10.3790/ccm.15.2.227 | Gene a ed on 2023-01-16 12:47:38
246 Hugo M. Kau mann
Commi ee on he P esen a ion o Balance o Paymen s S a is ics, which
consequen ly ecommended he aboli ion o epo ing subaccoun s.31
Fu he mo e, he ade balance only e lec s he alue, no he
olume o ade, and his ac plays an impo an ole o assessing
coun ies unde a sys em o lexible exchange a es. Be ween 1977 and
1978 ade su pluses o Ge many ose, hough he olume o impo s in o
Ge many inc eased, oo, and expo s ell signi ican ly. I was he e ms
o ade e ec which swamped wha o he wise would ha e amoun ed
o a de e io a ion in he ade balance.
Some o he undamen al ques ions ega ding balance o paymen s in-
e p e a ion and analysis can be aised in connec ion wi h na ional
economic policy objec i es. I can be a gued ha in he anking o
p io i ies o mac oeconomic goals — p ice s abili y, ull employmen ,
sa is ac o y g ow h a e, and balance o paymen s equilib ium — he
ex e nal equilib ium goal ha dly e e anks on op, no would i be
conside ed an independen goal, independen o o he coun ies' ac ions.
Ra he , i is he esul o he pu sui o o he policy objec i es o he
coun y unde in es iga ion as well as o ' he es o he wo ld/ As
such, i is no he balance o paymen s o exchange a e mo emen s
pe se which mani es social p e e ence unc ions, bu he balance o
paymen s is he esidual, as i we e, o all he o he objec i es in in e -
dependen and in e ac ing economies. Since he balance o paymen s
e lec s he o ali y and in e ac ion o all he decisions which a e made
by he na ionals and hei go e nmen s, i is well nigh impossible o
p e en policy ac ions and eac ions om aiming a goals which a e
i econcilable. To smoo hen hings, exchange a e lexibili y p o ides
a be e amewo k han he B e on Woods sys em would ha e.
We mus conclude ha building a case on spu ious balance o pay-
men s in e p e a ion is a poo s a ing poin o assessing coun ies'
ela i e s eng hs and o he locomo i e a gumen .
31 See he Repo o he Re iew Commi ee o Balance o Paymen s S a is-
ics o he Bu eau o he Budge (Be ns ein Commi ee), The Balance o
Paymen s S a is ics o he Uni ed S a es: A Re iew and App aisal, Ap il
1965; and he "Repo o he Ad iso y Commi ee on he P esen a ion o
Balance o Paymen s S a is ics," in he S a is ical Repo e , Washing on:
O ice o Managemen and Budge , June 1976. Consul u he Robe M.
S e n e al., The P esen a ion o he U.S. Balance o Paymen s: A Symposium.
Essays in In e na ional Finance, No. 123, Augus 1977. P ince on, N. J.: In e -
na ional Finance Sec ion, P ince on Uni e si y.
OPEN ACCESS | Licensed unde CC BY 4.0 | h ps://c ea i ecommons.o g/abou /cclicenses/
DOI h ps://doi.o g/10.3790/ccm.15.2.227 | Gene a ed on 2023-01-16 12:47:38

In e na ional S ag la ion and he 'Locomo i e Hypo hesis' 247
III. Conclusion
Upon close inspec ion o he mo e impo an a gumen s o he
locomo i e hypo hesis, which we e designed o induce he s onge
coun ies o expand hei ac i i ies o hei own as well as he weake
coun ies' bene i , we ind ha all o hem show weaknesses o in-
consis encies o bo h. The coun ies o whom g ea e assis ance was
expec ed did no poin o hese aspec s; a he hey ook e uge in
s essing hei own in e nal cons ain s on bo h economic and poli ical
g ounds.32
Wi h he locomo i e oad o ekindling economic ac i i y on an in e -
na ional scale as good as closed, in e na ional economic policy coo dina-
ion p esen s i sel as a iable al e na i e. Coo dina ion would ha e o
consis o mu ually ag eed upon and consis en economic policy ac ions.
Coun ies may ha e o op o shock ea men wi h sho e ime lags
a he han o g adualism wi h longe ime lags un il he adjus men s
wo k hemsel es h ough. While such a policy choice is likely o be
esis ed by some coun ies, i would con ain he ollowing majo ad an-
ages: i would inc ease c edibili y o he se iousness o he policy
make s.
Mo eo e , p ac ical men and he o eign exchange ma ke s ha e a
sho a he han a long ime ho izon. Thus, o educe he excessi e
cu ency luc ua ions wi h he concomi an loss in social wel a e, as -
ac ing policy in e en ion is p e e able o g adualism.
We ha e expe ienced in he pas ha g adualism wo ks e y slowly,
e en impe cep ibly — a leas in he beginning. Thus, he de e mina-
ion o policy make s may be doub ed a home and ab oad. The c edi-
bili y o policy ac ions and he willingness and abili y o policy make s
o pe se e e, when policy measu es a e unpopula , may be ques ioned,
especially as he poli ical cycle app oaches elec ion ime. A such ime,
unpopula bu necessa y ac ions may be abandoned o e en supplan ed
by opposi e policies.
Simul aneously, he emp a ion o shi ing in o o he coun ies he
esponsibili y o p ope policy ac ions o one's own lack o success
32 See Hugo M. Kau mann, "Ge many's Op ion o be a Mini-Locomo i e:
A Reassessmen o 1977," Economia In e nazionale, 31 (3 - 4), Augus -
No embe 1978, pp. 196-211; and "F om he 'Locomo i e Hypo hesis' o
'Conce ed Ac ion' — The Me amo phosis o an Idea," Economia In e nazio-
nale, 32 (2 - 3), May - Augus 1979, pp. 267 - 282.
17*
OPEN ACCESS | Licensed unde CC BY 4.0 | h ps://c ea i ecommons.o g/abou /cclicenses/
DOI h ps://doi.o g/10.3790/ccm.15.2.227 | Gene a ed on 2023-01-16 12:47:38
248 Hugo M. Kau mann
in he adjus men p ocess would be heigh ened. We would hen be back
a he 'locomo i e' a gumen wi h i s limi a ions and doub ul ele ance.
Zusammen assung
Die In e na ionale S ag la ion und die „Lokomo i -Hypo hese"
De 1978 - 1979 s a ge undene zwei e „ölschock" gab uns die Möglichkei ,
die wi scha lichen Folgen des 1973 - 1974 e olg en e s en ölschocks e neu
du chzuspielen, wenn auch eine Vo he sage de genauen Auswi kungen de
zwei en ölp eise höhung ode de dadu ch he o ge u enen Reak ionen un-
möglich wa .
Dahe is es on In e esse, die am An ang de on de Angebo ssei e aus-
gelös en E schü e ungen in den g oßen wes lichen Indus ielände n (ein-
schließlich Japan) he schenden konjunk u ellen Ve häl nisse zu e gleichen,
sowie die poli ische Ku se und poli ischen Fehle zu analysie en, die de
e s e Schock nach sich zog. Un e den als Rich linien ü eine Lösungs indung
dienenden i ümlichen Vo s ellungen s and an e s e S elle die „Lokomo i -
Hypo hese", wonach die als „s a k" bezeichne en S aa en sowohl die eigenen
wi scha lichen P obleme als auch die de schwäche en S aa en dadu ch
lösen soll en, daß sie eine expansionis ische binnenwi scha liche Poli ik e -
olgen. Es wu de behaup e , daß eine in den „s a ken" S aa en be iebene
expansionis ische Poli ik kaum zu eine zusä zlichen In la ion üh en wü de,
da auch sie — und nich nu die schwachen S aa en — mi eine Kapazi ä s-
auslas ung a bei e en, die e heblich un e dem Maximum lag.
Nach He o hebung de Haup hesen de Lokomo i -Hypo hese, s ell die-
se Bei ag die Gül igkei ih e heo e ischen G undlagen in F age.
Die heo e ische G undlage des „Lokomo i en-A gumen s" basie e au
Keynes*sehen
Übe legungen und au dem Ve auen in die olkswi scha liche
Feins eue ung. De Bei ag un e such , ob angesich s de En wicklungen in
de ealen Wel und au G und de Wi scha s heo ie diese P ämissen ge-
ech e ig wa en. Was geschah mi de Wi ksamkei on Wi scha spoli ik
bei un e schiedlichen Wechselku ssys emen, mi de Geldillusion, mi de
Subs i u ion zwischen A bei slosigkei und In la ion, mi Schä zungen de
unausgenu z en P oduk ionskapazi ä en, und mi de Be o zugung eine
Nach agebelebung s a eine Angebo ss imulie ung? Die Fes s ellung, ob
die Nach age ode das Angebo ange eg we den müß e, beein luß die E -
wa ungen, die in na ionale und in e na ionale poli ische En scheidungen ge-
se z we den.
Das Lokomo i en-A gumen schenk e im Rahmen eines lexiblen Wechsel-
ku ssys ems dem Ein luß on Wechselku se ek en au na ionale Poli iken,
Kapi albewegungen und au die in e na ionalen Auswi kungen on na iona-
len Poli iken zu wenig Au me ksamkei . Die Basis ü die Eins u ung in
schwache und s a ke Lände is agwü dig und eine Klassi izie ung wi d
du ch das J-Ku en-Phänomen noch meh komplizie . Unausgeglichene
OPEN ACCESS | Licensed unde CC BY 4.0 | h ps://c ea i ecommons.o g/abou /cclicenses/
DOI h ps://doi.o g/10.3790/ccm.15.2.227 | Gene a ed on 2023-01-16 12:47:38
In e na ional S ag la ion and he 'Locomo i e Hypo hesis' 249
Leis ungsbilanzen müssen ielmeh im Lich e on Bes andsände ungen be-
ach e we den. Fe ne können Wechselku se und Zahlungsbilanzen nich
nu in eine Rich ung e mi el we den — eine Ta sache, die bei de In e -
p e a ion on Zahlungsbilanzen zu leich e nachlässig wi d.
Summa y
In e na ional S ag la ion and he 'Locomo i e Hypo hesis'
The second 'oil shock' o 1978 - 1979 made a eplay o he economic con-
sequences o he i s oil shock o 1973 - 1974 possible, e en hough i was
no possible o p edic he exac impac o and eac ions o he second oil
p ice hike.
I is hus o in e es o compa e he cyclical condi ions o he majo Wes e n
indus ialized coun ies (plus Japan) a he beginning o he supply shocks
and o analyse policies and policy mis akes in he wake o he i s ex e nal
shock. Fo emos among he mis aken ideas, which se ed as guidance o a
solu ion was he locomo i e a gumen ' acco ding o which coun ies, which
we e designa ed as 's ong' coun ies, we e expec ed o sol e hei own
and he weake con ies' economic woes by engaging in expansiona y
domes ic economic policies. I was a gued ha expansiona y policies in he
o me g oup o coun ies would ha dly lead o addi ional in la ion, since,
hey oo, no only he weak coun ies, ope a ed subs an ially below capaci y
le els.
A e ha ing highligh ed he main ea u es o he locomo i e a gumen ,
his s udy ques ions he alidi y o he heo e ical unde pinnings o ha
hypo hesis.
The heo e ical basis o he 'locomo i e a gumen ' was Keynesian and con-
idence in ie- uning economies p e ailed. The s udy in es iga es whe he he
p emises we e jus i ied in ligh o de elopmen s in he eal wo ld and
economic heo ies. Wha happened o he e ec i eness o economic policy
unde di e en exchange a e egimes, o money illusion, o he unemploy-
men -in la ion ade-o , o es ima ions o unused p oduc i e capaci y, and
o he emphasis on demand a he han supply c ea ion? The de e mina ion
o whe he demand o supply ough o be s imula ed has implica ions on
wha can be expec ed o en ol e om na ional and in e na ional policy
decisions.
The locomo i e a gumen paid oo li le a en ion o he implica ons o he
lexible exchange a e sys em upon exchange a e e ec s o domes ic policies,
capi al mo emen s, and he in e na ional ansmission o domes ic economic
policies. The basis o coun y classi ica ion in o weak and s ong ones is o
dubious alidi y, and he J-cu e phenomenon u he complica es ca ego -
iza ion. Cu en accoun imbalances may ha e o be seen in ligh o s ock
adjus men s. Mo eo e , exchange- a e and cu en -accoun de e mina ion
a e no unidi ec ional — a ac oo easily igno ed in balance o paymen s
in e p e a ions.
OPEN ACCESS | Licensed unde CC BY 4.0 | h ps://c ea i ecommons.o g/abou /cclicenses/
DOI h ps://doi.o g/10.3790/ccm.15.2.227 | Gene a ed on 2023-01-16 12:47:38
250 Hugo M. Kau mann
Résumé
La s ag la ion in e na ionale e l'"hypo hèse des locomo i es"
Fu -il impossible d'en p é oi les e ec s p écis ou les éac ions engend ées,
le deuxième choc pé olie des années 1978 - 1979 nous a pe mis d'obse e à
nou eau les conséquences économiques du p emie choc des années 1973 - 1974.
Il é ai donc in é essan de compa e les si ua ions conjonc u elles des
g ands pays indus ialisés occiden aux (Japon inclus) au débu des boule e -
semen s p o oqués du cô é de l'o e e d'analyse les o ien a ions e les
e eu s poli iques qu'en aîna le p emie choc.
Pa mi les e eu s de concep ion au se ice de la eche che de solu ions, l'on
ange a en p emiè e place 1'"hypo hèse des locomo i es" qui oulai que les
E a s quali iés de " o s" ésol en leu s p oblèmes économiques p op es e
ceux des E a s aibles en p a iquan une poli ique in é ieu e expansionnis e.
E l'on a p é endu que pa eille poli ique de c oissance des E a s o s ne
p odui ai pas un su c oî d'in la ion, ca ces E a s aussi — e pas seulemen
les E a s aibles — a aillaien la gemen en-des-sous de leu s capaci és
d'u ilisa ion de l'ou il.
Ap ès a oi mis l'accen su les hèses p incipales de l'hypo hèse des
locomo i es, l'au eu s'in e oge su la alidi é de leu s ondemen s héo i-
ques.
La base héo ique de 1'"a gumen des locomo i es" epose su les idées de
Keynes e su la oi en une condui e de p écision de l'économie. L'é ude
examine la jus esse de ces p émisses en se ondan su les dé eloppemen s
du monde éel e su la héo ie économique. Qu'en u -il de l'e icaci é de la
poli ique économique sous la coupe de sys èmes di é en s de aux de change,
de l'illusion moné ai e, de la subs i u ion en e chômage e in la ion, des es i-
ma ions des capaci és de p oduc ion inexploi ées, e de la p é é ence acco dée
à la elance de la demande su la s imula ion de l'o e? La cons a ion que la
demande ou l'o e doi ê e s imulée in luence les an icipa ions placées dans
les décisions poli iques na ionales e in e na ionales.
Dans un égime de aux de change a iables, l'a gumen des locomo i es
oc oie op peu d'a en ion à l'in luence des e e s des cou s de change su
les poli iques na ionales, les mou emen s de capi aux e les épe cussions
in e na ionales des poli iques na ionales.
La base de la classi ica ion en pays o s e aibles es p obléma ique, e le
phénomène des cou bes y complique enco e la classi ica ion. Les déséquilib es
des balances des opé a ions cou an es doi en plu ô ê e examinés dans
l'op ique d'un ed essemen des mou emen s. Au su plus, les in es iga ions
su les aux de change e les balances de paiemen s ne peu en s'opé e dans
une seule di ec ion, ci cons ance op sou en négligée dans l'in e p é a ion
des balances de paiemen s.
OPEN ACCESS | Licensed unde CC BY 4.0 | h ps://c ea i ecommons.o g/abou /cclicenses/
DOI h ps://doi.o g/10.3790/ccm.15.2.227 | Gene a ed on 2023-01-16 12:47:38