Monetary policy, financial circuits and industrial dynamics in the five most industrialized countries from 1960 to 1992.

Summary The break in growth dynamics in the mid-1970s for the five largest industrialized countries is explained by the conjunction of three industrial, external and monetary constraints. The study covers the period 1960-1992. The industrial constraint is demonstrated by the application of an econometric relation proposed by Kaldor between the growth of industrial production and that of income. The external constraint is analyzed in terms of bifurcation and an economic relationship between external balance and growth differential is tested. Finally, the monetary constraint is presented through the role of savings in the adjustment of the income distribution on the one hand, and of interest rates in the determination of the volume and sectoral orientation of investment on the other. The implications of the Phelps golden rule are assessed. A synthesis is made using a principal component analysis with 45 economic indicators from 1966 to 1986. Starting from the reversal of the very definition of money with the breakdown of the Bretton Woods system, monetary and financial strategies that can support the industrialization of economies are defined. In the internal sphere, a policy of resource allocation, organization of financial circuits and interest rates is proposed. In the external field, the analysis covers the regulation of external equilibria by exchange rates, the organization of the international monetary system and attempts at European integration.