Macromiximisation (1980)

The theory of macroeconomic policy that has dominated thought and policy making since the later 1930s is essentially one-dimensional in the closed economy (and two-dimensional in the open economy). That is to say, in a closed economy we have been taught to operate on the level of demand — with any or every macroeconomic instrument. When inflation is too rapid the aim has been to use (some or all of) our policy instruments to reduce demand; and when unemployment is too high we have learned to raise the level of demand.