The most striking and strikingly common features of the postwar history of macroeconomic policy in developed democracies were the sharp upward trends in transfer payments and attendant increases in total fiscal activity, the dramatically rising public debt–to-GDP ratios since the stagflationary 1970s, and the strong shifts toward antiinflationary monetary policies and institutions that followed. Policy and outcome differences, however, were at least as notable. Transfers share of GDP nearly septupled in the Netherlands while less than doubling in Germany. Irish, Italian, and Belgian government debt rocketed past 100% of GDP, while remaining more subdued in the United Kingdom and generally declining in Australia. Inflation, drifting higher through the 1960s and spiking twice in the 1970s, eventually subsided everywhere, but at differing paces and to differing degrees, while the unemployment costs of that policy shift varied even more radically.
This book applies and extends modern political-economic theory to explain the commonalities and differences in this evolution of macroeconomic policies and outcomes across 21± developed democracies over the 50± years since World War II. Through this explanation, the book elaborates a theoretical view of comparative political economy in which similar policy-making challenges and universal tensions between the allocations of political and economic resources in liberal-market democracies induce different policies and outcomes because the domestic and international political-economic institutions, interest structures, and conditions within which public and private actors operate and to which they respond differ across countries and over time.