The Economy in the Nineties: Through the Slump to Prosperity?

Abstract

There is general agreement that the economy is in slump. There is also general agreement that the slump is the product of macroeconomic policy. In an attempt to redress the adverse balance of payments public policy has dampened economic activity through tight fiscal and monetary policy. The need to contain the growth in imports will have a vital bearing on the economic growth facilitated by public policy in the short and medium term. The paper details the factors determining the appropriate levels of growth in the short term which will enable a “soft” landing for the economy. However, the paper doubts that this “soft” landing will be achieved. The paper also examines the longer term prospects. It argues that, given the appropriate policy framework, a period of prosperity is achievable.