Working Paper: NBER ID: w24367
Authors: Sebastian Edwards
Abstract: On December 31 1933, The New York Times published an open letter from John Maynard Keynes to President Franklin D. Roosevelt. In it Keynes encouraged FDR to expand public works through government borrowing. He also criticized FDR’s exchange rate policy, and argued that there was a need for lower long-term interest rates. But perhaps the most interesting feature of this letter is that Keynes made comments on the sequencing and speed of economic policies. He argued that “recovery” policies should precede “reform” measures. In this paper I analyze this particular aspect of the open letter, and I argue that for Keynes exchange rate stability was a key component of what he considered to be the appropriate order of policy. I also provide a comparison between Keynes’s views on sequencing and those developed in the 1980s and 1990s.
Keywords: No keywords provided
JEL Codes: B21; B22; B26; B27; E31; F31; N12; N22
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Sequencing of recovery policies (C41) | Investor confidence (G24) |
| Investor confidence (G24) | Economic recovery (E65) |
| Failure to prioritize recovery (G33) | Lack of confidence (D83) |
| Lack of confidence (D83) | Hindrance to economic recovery (E65) |
| Hasty implementation of reform policies (D78) | Economic instability (E32) |
| Hasty implementation of reform policies (D78) | Economic growth (O00) |