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74-479: A central assumption of IPE theory is that international economic phenomena do not exist in any meaningful sense separate from the actors who regulate and control them. Alongside formal economic theories of international economics, trade, and finance, which are widely utilised within the discipline, IPE thus stresses the study of institutions, politics, and power relations in understanding the global economy. The substantive issue areas of IPE are frequently divided into

148-547: A New Bretton Woods System . Topics such as the International Monetary Fund , Financial Crises (see Financial crisis of 2007–2008 and 1997 Asian financial crisis ), exchange rates , Foreign Direct Investment , Multinational Corporations receive much attention in IPE. There are multiple approaches to trade within IPE. These approaches seek to explain international bargaining between states, as well as

222-423: A political and economic philosophy which advocates a restrained fiscal policy and the balancing of budgets , through measures such as low taxes, reduced government spending, and minimized government debt. To economic nationalists, markets are subordinate to the state, and should serve the interests of the state (such as providing national security and accumulating military power). The doctrine of mercantilism

296-656: A 1980 article for the notion that the international system is more likely to remain stable when a single nation-state is the dominant world power, or hegemon . Keohane's 1984 book After Hegemony , used insights from the new institutional economics , to argue that the international system could remain stable in the absence of a hegemon. Benjamin Cohen provides a detailed intellectual history of IPE identifying American and British camps. The Americans are positivist and attempt to develop intermediate level theories that are supported by some form of quantitative evidence. British IPE

370-630: A 2017 assessment by Thomas Oatley, there are "no strong conclusions" in IPE scholarship as to which of these models better characterizes the sources of individual trade policies. Aside from the sector and factor models, there are firm-specific models of trade preferences (some times described as "New new" trade theory ) which predict that those who work for large, productive and globally oriented firms support trade liberalization (as well as free movement of capital and labor), whereas employees in smaller firms are less supportive of free trade. Economic geography approaches explain trade policies by looking at

444-479: A 3% change in GDP after one year, and one gave almost no change, with the rest spread between. Partly as a result of such experiments, modern central bankers no longer have as much confidence that it is possible to 'fine-tune' the economy as they had in the 1960s and early 1970s. Modern policy makers tend to use a less activist approach, explicitly because they lack confidence that their models will actually predict where

518-502: A Leontiev model, see the Phillips reference below. All through the 18th century (that is, well before the founding of modern political economy, conventionally marked by Adam Smith's 1776 Wealth of Nations ), simple probabilistic models were used to understand the economics of insurance . This was a natural extrapolation of the theory of gambling , and played an important role both in the development of probability theory itself and in

592-597: A clear basis for soundness, namely the validity of the supporting model. Economic models in current use do not pretend to be theories of everything economic ; any such pretensions would immediately be thwarted by computational infeasibility and the incompleteness or lack of theories for various types of economic behavior. Therefore, conclusions drawn from models will be approximate representations of economic facts. However, properly constructed models can remove extraneous information and isolate useful approximations of key relationships. In this way more can be understood about

666-627: A country abundant in labor will export labor-intensive products (such as textiles). Building on this model, the Stolper-Samuelsson theorem holds that groups that possess the factors will support or oppose trade depending on the abundance or scarcity of the factors. This means that in a country which is abundant in land and scarce in capital, farmers will support free trade whereas producers in capital-intensive manufacturing will oppose free trade. The factor model predicts that labor in developed countries will oppose trade liberalization (because it

740-633: A fundamental limit to their predictive powers: chaos . Although the modern mathematical work on chaotic systems began in the 1970s the danger of chaos had been identified and defined in Econometrica as early as 1958: It is straightforward to design economic models susceptible to butterfly effects of initial-condition sensitivity. However, the econometric research program to identify which variables are chaotic (if any) has largely concluded that aggregate macroeconomic variables probably do not behave chaotically. This would mean that refinements to

814-476: A model of behavior, so that an economist can differentiate between changes in relative prices and changes in price that are to be attributed to inflation. In addition to their professional academic interest, uses of models include: A model establishes an argumentative framework for applying logic and mathematics that can be independently discussed and tested and that can be applied in various instances. Policies and arguments that rely on economic models have

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888-561: A more practical level, quantitative modelling is applied to many areas of economics and several methodologies have evolved more or less independently of each other. As a result, no overall model taxonomy is naturally available. We can nonetheless provide a few examples that illustrate some particularly relevant points of model construction. Most economic models rest on a number of assumptions that are not entirely realistic. For example, agents are often assumed to have perfect information, and markets are often assumed to clear without friction. Or,

962-539: A particular sector may have similar interests. As a consequence, trade preferences are better understood by examining which economic sectors win or lose on trade liberalization. Whereas the factor model assumes that capital-owners in different sectors have similar trade preferences and that labor across different sector have similar trade preferences, the Ricardo-Viner model holds that in sectors where factors are immobile, labor and capital-owners in one sector may have

1036-407: A reasoned choice of which variables and which relationships between these variables are relevant and which ways of analyzing and presenting this information are useful. Selection is important because the nature of an economic model will often determine what facts will be looked at and how they will be compiled. For example, inflation is a general economic concept, but to measure inflation requires

1110-457: A set of logical and/or quantitative relationships between them. The economic model is a simplified, often mathematical , framework designed to illustrate complex processes. Frequently, economic models posit structural parameters . A model may have various exogenous variables , and those variables may change to create various responses by economic variables. Methodological uses of models include investigation, theorizing, and fitting theories to

1184-501: A solution of the paradoxical Saint Petersburg problem . All of these developments were summarized by Laplace in his Analytical Theory of Probabilities (1812). Thus, by the time David Ricardo came along he had a well-established mathematical basis to draw from. In the late 1980s, the Brookings Institution compared 12 leading macroeconomic models available at the time. They compared the models' predictions for how

1258-443: Is a prominent variant of economic nationalism. Economic nationalists tend to see international trade as zero-sum , where the goal is to derive relative gains (as opposed to mutual gains). Economic nationalism tends to emphasize industrialization (and often aids industries with state support), due to beliefs that industry has positive spillover effects on the rest of the economy, enhances the self-sufficiency and political autonomy of

1332-487: Is also concerned with development economics and explaining how and why countries develop. Historically, three prominent approaches to IPE were the liberal, economic nationalist (mercantilist), and marxist perspectives. Economic liberals tend to oppose government intervention in the market when it inhibits free trade and open competition , but support government intervention to protect property rights and resolve market failures . Economic liberals commonly adhere to

1406-595: Is more "interpretivist" and looks for "grand theories". They use very different standards of empirical work. Cohen sees benefits in both approaches. A special edition of New Political Economy has been issued on The 'British School' of IPE and a special edition of the Review of International Political Economy (RIPE) on American IPE. The leading journal for IPE scholarship is the generalist international relations journal International Organization . International Organization played an instrumental role in making IPE one of

1480-474: Is one of the core areas of study in IPE. In IPE scholarship, the interrelation of economic and political interests in international finance assumes it impossible to separate the financial system from international politics in any meaningful sense. The IPE of international finance is characterized by political network effects and international externalities, such as beggar-thy-neighbour effects and contagions. A key concept in IPE literature on international finance

1554-763: Is relatively scarce), whereas labor in developing countries will support free trade (because it is relatively abundant). Building on these insights, influential research by Ronald Rogowski argued that factor endowments predicted whether countries were characterized by class-conflict (capital vs. labor) or urban-rural conflict. Similarly, an influential study by Helen Milner and Keiko Kubota argues that factor endowments explain why developing countries liberalize their trade after they democratize (the abundant factor, labor, supports trade liberalization). A 2023 study by Milner and Lindsay R. Dolan found that factor endowments help explain trade preferences in Africa. Research has substantiated

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1628-491: Is that the market's invisible hand guides an economy to prosperity more efficiently than central planning using an economic model. One reason, emphasized by Friedrich Hayek , is the claim that many of the true forces shaping the economy can never be captured in a single plan. This is an argument that cannot be made through a conventional (mathematical) economic model because it says that there are critical systemic-elements that will always be omitted from any top-down analysis of

1702-456: Is the impossible trinity , derived from the Mundell–Fleming model , which holds that it is impossible to simultaneously pursue all of the following three economic policies: Another key dilemma in monetary policy is that governments have to balance the inflation rate (the price of money at home) and the exchange rate (the price of money outside the home market). There is no agreement in

1776-450: Is the notion that resources flow from a " periphery " of poor and underdeveloped states to a " core " of wealthy states , enriching the latter at the expense of the former. It is a central contention of dependency theory that poor states are impoverished and rich ones enriched by the way poor states are integrated into the " world system ". This theory was officially developed in the late 1960s following World War II, as scholars searched for

1850-621: Is the scarce factor of endowment (contradicting Heckscher-Ohlin). The degree to which Ricardo-Viner and Heckscher-Ohlin are correct is conditioned by whether workers have profit-sharing institutions or are unionized (which helps them to bargain for higher wages amid productivity increases). He has also challenged Milner and Kubota's study on trade liberalization in developing countries, as he shows that democratic developing countries frequently repressed labor unions amid trade liberalization. Studies by Dani Rodrik and Anna Mayda, as well as Kenneth Scheve and Matthew J. Slaughter have found support for

1924-637: The Bretton Woods system was established, reflecting the political orientation described as embedded liberalism . In 1971 President Richard Nixon ended the convertibility of gold that had been established under the IMF in the Bretton Woods system. Interim agreements followed. Nonetheless, until 2008 the trend has been for increasing liberalization of both international trade and finance. From later 2008 world leaders have also been increasingly calling for

1998-487: The Great Depression of the 1930s. Alan Deardorff has analysed beggar-thy-neighbour policies as an instance of the prisoner's dilemma known from game theory : each country individually has an incentive to follow such a policy, thereby making everyone (including themselves) worse off. Reconciling the dilemma of beggar-thy-neighbor policies involves realizing that trade is not a zero-sum game , but rather

2072-453: The comparative advantage of each economy offers real gains from trade for all. An early 20th-century appearance of the term is seen in the title of a work on economics from the early period of the Great Depression : The phrase is in widespread use, as seen in such publications as The Economist and BBC News . "Beggar thy neighbour" strategies of this kind are not limited to countries: overgrazing provides another example, where

2146-526: The 1960s and 1970s, prompted by the growth of international economic institutions such as the World Bank , International Monetary Fund , and the General Agreement on Tariffs and Trade , alongside economic turmoils such as the fall of the gold standard , 1973 oil crisis , and 1970s recession . IPE is also a major field of study within history, especially economic history, where scholars study

2220-472: The Heckscher-Ohlin model of trade, the comparative advantage of countries in trade stems from their endowments of particular factors of trade ( land , labor , capital ). This means that a country abundant in land will primarily export land-intensive products (such as agriculture), whereas a country abundant in capital will export capital-intensive products (such as high-technology manufacturing) and

2294-628: The OEP framework include behavioral approaches (which do not necessarily accept that individual interests stem from material incentives), and economic geography approaches. According to Stephanie Rickard, OEP scholars have modified their models to incorporate incomplete information (which affects how individual preferences are formed) and economies of scale (which affects the distribution of gains and losses). Erica Owen and Stephanie Walter similarly argue that "second-generation" OEP frameworks incorporate both material and ideational preferences. Dependency theory

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2368-487: The OEP tradition has moved our understanding of world politics decisively forward. Critics of OEP have yet to offer an alternative, more empirically powerful theory and as a result, OEP continues to progress as the dominant paradigm in IPE research. Scholars have questioned the empirical validity of the models derived from OEP scholarship on money and trade, as well as questioned the ability of OEP scholarship to explain momentous events in global political economy. Challengers to

2442-414: The country, and is a crucial aspect in building military power. There are several prominent approaches to IPE. The dominant paradigm is Open Economy Politics. Other influential approaches include dependency theory, hegemonic stability theory, and domestic political theories of IPE. Early modern IPE scholarship employed a diversity of methods and did both grand theory and middle range theory, but over time,

2516-629: The development of actuarial science . Many of the giants of 18th century mathematics contributed to this field. Around 1730, De Moivre addressed some of these problems in the 3rd edition of The Doctrine of Chances . Even earlier (1709), Nicolas Bernoulli studies problems related to savings and interest in the Ars Conjectandi . In 1730, Daniel Bernoulli studied "moral probability" in his book Mensura Sortis , where he introduced what would today be called "logarithmic utility of money" and applied it to gambling and insurance problems, including

2590-504: The domestic level and macro processes at the global level: in essence, OEP scholarship suffers from omitted variable bias . According to Peter Katzenstein, Robert Keohane and Stephen Krasner, scholarship in this vein assumes that actors' preferences and behavior are derived from their material position, which leads to a neglect of the ways in which variation in information may shape actor preferences and behaviors. Mark Blyth and Matthias Matthijs argue that OEP scholarship essentially black boxes

2664-442: The domestic sources of global economic cooperation or explain how global processes influence domestic policy-making. The third wave increasingly focused on explaining the micro-foundations of policy. According to Benjamin Cohen, "in terms of theory, consensus is often lacking on even the most basic causal relationships" in IPE scholarship. Open Economy Politics (OEP) can be traced to domestic political theories of IPE; OEP emerged in

2738-513: The economics literature on the optimal national exchange rate policy . Rather, national exchange rate regimes reflect political considerations. National exchange rate policies can be 1. fixed, floating, or a hybrid of the two, and 2. entail a strong or weak currency. Different groups benefit disproportionately depending on the national exchange rate policies that is chosen. The liberal view point generally has been strong in Western academia since it

2812-486: The economy is going, or the effect of any shock upon it. The new, more humble, approach sees danger in dramatic policy changes based on model predictions, because of several practical and theoretical limitations in current macroeconomic models; in addition to the theoretical pitfalls, ( listed above ) some problems specific to aggregate modelling are: Complex systems specialist and mathematician David Orrell wrote on this issue in his book Apollo's Arrow and explained that

2886-451: The economy would respond to specific economic shocks (allowing the models to control for all the variability in the real world; this was a test of model vs. model, not a test against the actual outcome). Although the models simplified the world and started from a stable, known common parameters the various models gave significantly different answers. For instance, in calculating the impact of a monetary loosening on output some models estimated

2960-432: The economy. Beggar thy neighbour In economics , a beggar-thy-neighbour policy is an economic policy through which one country attempts to remedy its economic problems by means that tend to worsen the economic problems of other countries. Adam Smith made reference to the term in claiming that mercantilist economic doctrine taught nations "that their interest lies in beggaring all their neighbours". The term

3034-521: The effects of trade protectionism, which puts doubt on theories that assume that trade policy preferences are rooted in economic self-interest. Trade may in and of itself alter domestic politics, including the trade preferences of the public. A 1988 study by Helen Milner found that trade openness substantially increased support for free trade by strengthening the position of firms that stand to lose from trade protectionism. Influential studies by David Cameron, Dani Rodrik and Peter Katzenstein have affirmed

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3108-582: The emergence of the discipline were international relations scholars Robert Keohane , Joseph Nye and Robert Gilpin in the United States, as well as Susan Strange in the United Kingdom. IPE has since become a key pillar in political science departments as well as a major subdiscipline of international relations, alongside traditional international relations scholarship centred on material security. International finance and monetary relations

3182-489: The exact form of these equations. This is because complex systems like the economy or the climate consist of a delicate balance of opposing forces, so a slight imbalance in their representation has big effects. Thus, predictions of things like economic recessions are still highly inaccurate, despite the use of enormous models running on fast computers. See Unreasonable ineffectiveness of mathematics § Economics and finance . Economic and meteorological simulations may share

3256-533: The extent that it accurately mirrors the relationships that it purports to describe. Creating and diagnosing a model is frequently an iterative process in which the model is modified (and hopefully improved) with each iteration of diagnosis and respecification. Once a satisfactory model is found, it should be double checked by applying it to a different data set. According to whether all the model variables are deterministic, economic models can be classified as stochastic or non-stochastic models; according to whether all

3330-485: The factor models, as they show that there is greater support for trade openness in developing countries (where labor is abundant and thus benefits from trade openness). Other studies find no support for either model, and argue that the models have limited explanatory value. A 2022 study in the Journal of Politics found that comparative advantage predicts attitudes on free trade among individuals and legislators. According to

3404-613: The foreign economic policies that states adopt. In terms of domestic explanations for the foreign economic policies of states, the two dominant approaches are the factor model and sector model, both of which build on David Ricardo's theory of comparative advantage . The factor model (which has been called the H-O-S-S model ) is shaped by the Heckscher-Ohlin model and the Stolper-Samuelsson theorem . According to

3478-407: The four broad subject areas of 1. international trade, 2. the international monetary and financial system, 3. multinational corporations, and 4. economic development and inequality. Key actors of study may include international organizations , multinational corporations , and sovereign states . International political economy is a major subdiscipline of international relations where it emerged in

3552-423: The global economy. Stephanie Rickard has defended the OEP approach, writing in 2021: OEP has matured and developed over the past decade. As a framework, it has proven to be enormously productive and adaptable—integrating diverse economic phenomena under a common theoretical umbrella and providing a framework flexible enough to react to significant events in the global economy... The accumulating body of scholarship in

3626-557: The historical dynamics of the international political economy. International political economy has its historic roots in the discipline of political economy ; the study of the national economy and its interactions with governance and politics. Adam Smith 's publication of The Wealth of Nations profoundly influenced the development of the field of political economy. While the newly founded discipline of economics ; which studies economic phenomena absent political and social considerations; began to diverge from political economy studies in

3700-523: The insights of the Double Movement , as they show that greater trade openness has been associated with increases in government social spending. In terms of how preferences get aggregated and reconciled into foreign economic policies, IPE scholars have pointed to collective action problems, electoral systems, regime types, veto points, the nature of the legislative trade policy process, the interaction between domestic and international bargaining, and

3774-423: The interactions between political elites and epistemic communities. Some IPE scholarship de-emphasizes the role of domestic politics and points to international processes as shapers of trade policy. Some scholars have argued for a "new interdependence" approach, which restores insights from the complex interdependence of the 1970s, but emphasizes network effects, control over central nodes, and path dependence. IPE

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3848-401: The late 1990s. OEP adopts the assumptions of neoclassical economics and international trade theory. It strongly emphasizes microfoundations . It has been characterized as employing rationalism, materialism and liberalism. According to David Lake , Thomas Oatley has criticized OEP for an overemphasis on domestic political processes and for failing to consider the interplay between processes at

3922-424: The late 19th century, political economy continued to live as an academic tradition within political science departments, as well as within modern economics as a pluralist approach. While notable works from John Maynard Keynes ' General Theory and Karl Polanyi's The Great Transformation published in the early 20th century are still written in the tradition of political economy, economics in its narrower form

3996-480: The major problems addressed by economic models has been understanding economic growth. An early attempt to provide a technique to approach this came from the French physiocratic school in the eighteenth century. Among these economists, François Quesnay was known particularly for his development and use of tables he called Tableaux économiques . These tables have in fact been interpreted in more modern terminology as

4070-458: The market. Production requires export subsidies for the domestic firm to capture the market, effectively deterring the competing entity. Imagine two companies: Boeing and Airbus , one American, one European firm. They can either choose to produce or to not produce . The matrix follows that if both produce both will lose market share (−5,−5) as they compete in the industry. If they both do not produce (0,0) nobody benefits. If one produces whilst

4144-413: The model may omit issues that are important to the question being considered, such as externalities . Any analysis of the results of an economic model must therefore consider the extent to which these results may be compromised by inaccuracies in these assumptions, and a large literature has grown up discussing problems with economic models , or at least asserting that their results are unreliable. One of

4218-535: The models could ultimately produce reliable long-term forecasts. However, the validity of this conclusion has generated two challenges: More recently, chaos (or the butterfly effect) has been identified as less significant than previously thought to explain prediction errors. Rather, the predictive power of economics and meteorology would mostly be limited by the models themselves and the nature of their underlying systems (see Comparison with models in other sciences above). A key strand of free market economic thinking

4292-410: The other does not (100,0) the producing company will capture the industry and have 100% share (0,100). Game theory states that the first mover , or the initial firm in the industry, will always win. The competing firm will have no incentive to enter the market once the competitor has the advantage and thus will be deterred. However, with a strategic trade policy of an export subsidy, the matrix changes as

4366-497: The predictions of the Stolper-Samuelsson theorem, showing that trade openness tends to reduce inequality in developing countries, but exacerbate it in advanced economies. The sectors model of trade, the Ricardo–Viner model (named after David Ricardo and Jacob Viner ), challenges the notion that factors are key to understanding trade preferences. Factors can be highly immobile, which means that capital-owners and labor who work in

4440-460: The prominent subfields in IR. The leading IPE-specific journals are the Review of International Political Economy and New Political Economy . Examples of journals within the historical study of IPE are Economic History Review and History of Political Economy . Economic model An economic model is a theoretical construct representing economic processes by a set of variables and

4514-467: The protecting government covers some of the costs. The matrix now changes from (−5,−5) to (−5,20) in favour of the domestic firm with the subsidy. This will see the protected firm win in the game and capture more of the market share as the subsidies burden the costs, which would otherwise deter the company. The game does not finish here, as the other company, being usurped on the second move, will then itself become protected through export subsidies, leading to

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4588-508: The pursuit by individuals or groups of their own interests leads to problems. This dynamic was dubbed the " tragedy of the commons " in an 1833 essay by British economist William Forster Lloyd , though it appears as early as the works of Plato and Aristotle . These trade policies can lead to trade wars between countries. These trade wars follow the prisoner's dilemma game theory analysis developed through Nash equilibrium in which two countries are poised against each other to produce in

4662-431: The regions that benefit and lose on globalization; it predicts that large cities support trade liberalization and that left-behind regions push back on liberalization. Other alternative models to the factor and sector models may explain individual preferences through demographic data (age, class, skills, education, gender), as well as ideology and culture. Some studies have raised questions about whether individuals understand

4736-413: The relationships in question than by trying to understand the entire economic process. The details of model construction vary with type of model and its application, but a generic process can be identified. Generally, any modelling process has two steps: generating a model, then checking the model for accuracy (sometimes called diagnostics). The diagnostic step is important because a model is only useful to

4810-496: The root issue in the lack of development in Latin America . Dependency theory and world systems theory are not mainstream economic theory. Early IPE scholarship was focused on the implications of hegemony on international economic affairs. In the 1970s, US hegemony appeared to be on the fall, which prompted scholars to consider the likely effects of this falling. Robert Keohane coined the term Hegemonic stability theory in

4884-504: The same trade preferences. As a result, the Ricardo-Viner model predicts that class conflict over trade is more likely when factors are highly mobile, but that industry-based conflict is more likely when factors are immobile. Adam Dean has challenged the economic assumptions in both models, arguing that workers' wages do not consistently correspond to increases in productivity in a given industry (contradicting Ricardo-Viner) nor do workers consistently benefit from import restrictions when labor

4958-481: The scholarship has become more quantitative and focused on middle-range theories. Robert Jervis wrote in 1998, "the IPE subfield, after a marvelous period of development in the 1970s and 1980s seems to be stagnating." The first wave of IPE scholarship focused on complex interdependence and the evolution of global systems of economic exchange. This scholarship focused on hegemonic stability theory , complex interdependence , and regimes . The second wave sought to explain

5032-417: The study of these institutions, and more broadly, to the study of governance of the world economy. The need for a more comprehensive understanding on global economic governance within political science circles became increasingly apparent through the crises of the 1970s; with the end of the gold standard , the 1973 oil crisis , 1973-1975 recession and calls for greater trade protection. Influential figures in

5106-494: The variables are quantitative, economic models are classified as discrete or continuous choice model; according to the model's intended purpose/function, it can be classified as quantitative or qualitative; according to the model's ambit, it can be classified as a general equilibrium model, a partial equilibrium model, or even a non-equilibrium model; according to the economic agent's characteristics, models can be classified as rational agent models, representative agent models etc. At

5180-415: The weather, human health and economics use similar methods of prediction (mathematical models). Their systems—the atmosphere, the human body and the economy—also have similar levels of complexity. He found that forecasts fail because the models suffer from two problems: (i) they cannot capture the full detail of the underlying system, so rely on approximate equations; (ii) they are sensitive to small changes in

5254-682: The world. In general terms, economic models have two functions: first as a simplification of and abstraction from observed data, and second as a means of selection of data based on a paradigm of econometric study. Simplification is particularly important for economics given the enormous complexity of economic processes. This complexity can be attributed to the diversity of factors that determine economic activity; these factors include: individual and cooperative decision processes, resource limitations, environmental and geographical constraints, institutional and legal requirements and purely random fluctuations. Economists therefore must make

5328-442: Was dominating economics departments from the 1920s and onward. The emergence of international political economy can be traced to the late 1960s and early 1970s, when deepening economic interdependence prompted by the growth of post-war economic institutions such as the International Monetary Fund , World Bank , and General Agreement on Tariffs and Trade , drew increasing attention within international relations scholarship towards

5402-510: Was first articulated by Smith in the eighteenth century. Only during the 1940s to early 1970s did an alternative system, Keynesianism , command wide support in universities. Keynes was concerned chiefly with domestic macroeconomic policy. The Keynesian consensus was challenged by Friedrich Hayek and later Milton Friedman and other scholars out of Chicago as early as the 1950s, and by the 1970s, Keynes' influence on public discourse and economic policy making had somewhat faded. After World War II,

5476-521: Was originally devised to characterise policies of trying to cure domestic depression and unemployment by shifting effective demand away from imports onto domestically produced goods, either through tariffs and quotas on imports , or by competitive devaluation . The policy can be associated with mercantilism and neomercantilism and the resultant barriers to pan-national single markets . According to economist Joan Robinson beggar-thy-neighbour policies were widely adopted by major economies during

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