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Focusing on 4 countries, Austria, Great Britain, Sweden and West Germany, it is shown that both runaway inflation and rising unemployment could be avoided whenever it was possible to achieve a Keynesian concertation between fiscal and monetary expansion on the one hand and union wage restraint on the other. The actual policy experiences of the 4 countries are then explained in terms of the linkage between a 'coordination game' played between the government and the unions in which macro-economic outcomes are determined, and a politics game in which the government tries to anticipate the electoral responses of different voter strata to these outcomes. (Abstract amended)

An attempt is made to explain the macroeconomic policy failures & successes of the "stagflation" period of the 1980s, using Organization for Economic Cooperation & Development statistics. Focusing on Austria, GB, Sweden, & West Germany, it is shown that both runaway inflation & rising unemployment could be avoided whenever it was possible to achieve a Keynesian concertation between fiscal & monetary expansion & union wage restraint. The actual policy experiences of the four countries are then explained in terms of the linkage between a coordination game played between the government & the unions in which macroeconomic outcomes are determined, & a political game in which the government tries to anticipate the electoral responses of different voter strata to these outcomes. 2 Tables, 12 Figures, 74 References. HA

ABSTRACTThe paper aims at a more complete, yet still parsimonious, explanation of macro-economic policy failure and success during the 'stagflation' period of the 1970s. Focusing on four countries, Austria, Great Britain, Sweden and West Germany, it is shown that both runaway inflation and rising unemployment could be avoided whenever it was possible to achieve a Keynesian concertation between fiscal and monetary expansion on the one hand and union wage restraint on the other. The actual policy experiences of the four countries are then explained in terms of the linkage between a 'coordination game' played between the government and the unions in which macro-economic outcomes are determined, and a politics game in which the government tries to anticipate the electoral responses of different voter strata to these outcomes.