Debt Crisis, Monetary System Instability and Technological Innovation : The Long-wave Perspective

Abstract

In a sense, the 1980s are in a position on the Long Wave similar to the 1930s. Based on this assumption, the following hypotheses are presented for analysis.

1) Instability and change in relative price structure-broadly defined here to include exchange rates, relative prices for oil and other primary products, terms of trade and inter-country differences in interest rates-have been much greater during the 1980s than in any other period since the end of the second world war.

2) The debt crisis, here again broadly defined, worsens. Latin American and other developing countries are not the only ones with debt crises. The United States, the key currency country in international transaction, is now a debtor nation, creating a situation that has destabilized the world economy's very foundations.

3) Sharp changes in relative price structure and deepening debt crises are not constantly recurring short-run phenomenon. They are major parts of long continued "global adjustment." They are distinctive attributes of the Long Wave as it makes one cycle every half century; they should be viewed as integral parts of the Long Wave.