Has French budgetary policy since the 1970s been truly Keynesian?*

Abstract

The article shows that budgetary policy in France since the 1970s cannot be characterized as Keynesian. To prove this, two rules of behaviour compatible with Keynesian teaching are proposed and then compared with changes in budgetary balances and with a battery of stylized facts. The article calls for a fiscal stimulus allowing production capacities to be fully used for the first rule, or the return to full employment for the second. The article also points to potential ways of showing that the objective of full employment is not incompatible with the ecological transition and can be more easily reachable with a reduction in work hours.

The slowing of growth in France: an interpretation based on Thirlwall’s law

“…See the Gallois report (November 2012), the "Pacte de Responsabilité" (December 2013) or the transformation of the "Crédit d'Impôt Compétitivité Emploi (CICE)" due in 2019.11 We are well aware of the numerous difficulties linked to the measure of the output gap but, for the sake of simplicity, we choose here to refer to the European Commission output gap. SeeCharles et al (2019) for a discussion of this concept. 12 Obviously, our comments depend on the measure of the output gap by the European Commission which estimates a positive output gap at the beginning of the 1970s (years of high inflation) and during the 2000s before the 2008 crisis (growth supposed bigger than its potential).…”