Re: Income tax and employment

["Esteban Perez" <eperez@xxxxxxxxxxxx>]

1.	Bresciani-Turroni´s book is certainly considered a classic on the German episode. His whole analysis of the inflation and the stabilization process is based on the quantity theory:

¨....German experiences show us the fundamental importnace in the determination of the level of internal proces and of the currency´s external value, if the quantity issued by the government. It was only the continual increase in the issues of legal money which made possible the incessant rise in prices and the continual fall in the the external value of the mark¨

Bresciani´s book unfortunately eclipsed Graham´s study on the German Hyperinflation (1930). From a PK view perhaps Graham is the more interesting author since he emphasized the relationshiop between monetary and real factors. More recently a mainstream economist, curiously enough, stressed the changes in output composition, resoucre allocation and in the organization of industry produced by the inflation. These have been emphasixed by historians but relegated to a marginal place or to no analysis at all by economists (Cagan ,1956).

2.	Perhaps Feldman 1993, 1000 page long study is the most complete.

3.	I have the 1972 edition of Money and the Real World. I am assuming that you address the stabilization (the Rentemark) in the postcript to the 1978 second edition: Why Money Matters.

4.	In your article with Kregel (1980) Keynes´s paradigm...you use the German episode to illustrate the effects of widespread indexation: ¨it is the worst form of anti-inflationary incomes policy since it will keep wages and prices stable only if they are already stable and there is nothing which alters expectations of their remaining stable¨.

5.	Kaldor in the Scourge..also addressed the problem of indexation. He focussed not only on the extent to which indexing is applied but also on the indexation interval. ¨the faster the inflation, the more prices and incomes become indexed to inflation and while the spread of indexing tends to accelerate inflation considerable, it also shortens the lag of adjustment of prices to costs...the smaller the lag, the weaker are the forces that keep the wage/price spiral going¨ Thus hyperinflation are like great plagues of the past they burnt themselves out. P. 61. 1986.
Any comments on Kaldor?. Is there a limit to instability?.
----------------------------------------------------------


<<< Paul Davidson <pdavidson@xxxxxxx>  5/ 8  8:57a >>>

For the best history of the period and the switch to the Rentemark
see  Bresscioni-Torroni 's book on The Great German Inflation.  If this is
to difficult to get you can read about what this period meant and how the
Rentemark ended the great German inflation in my book MONEY AND THE REAL
WORLD., 2nd edition.

Paul