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Abstract:
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This article reviews the treatment of open economy issues in Paul Davidson’s
book, John Maynard Keynes (2007). Davidson aptly summarizes Keynes’s
criticism of the international monetary system for the asymmetric “burden of
adjustment” it places on deficit countries compared with surplus countries,
which imparts a contractionary bias to the world economy. Davidson also
updates Keynes’s proposals for global monetary reform and extends his
analysis of international trade. However, Davidson’s arguments about
mainstream views of international finance and the ineffectiveness of exchange
rate adjustments are on less solid ground. This article suggests reformulations
of Davidson’s interpretations on the latter two points. |