ECONOMIC-POLICY AND SOCIAL-DEMOCRACY - THE AUSTRIAN EXPERIENCE

In the 1970s, Austria's social democratic government pursued a distinc tive policy strategy to overcome the period of stagflation and to main tain full employment after the first oil crisis. In the Keynesian trad ition, the model assigned expansionary fiscal and monetary policy, to stabilize effective demand and employment, the exchange rate to curb i nflation, while the balance of trade was left to moderate incomes poli cies by the social partners. In the 1970s, tills strategy was successf ul and the macroeconomic performance of the Austrian economy, was outs tanding. In the restrictive environment of the 1980s, the Austro-Keyne sian model waned, while the stabilizing elements of the model i.e. the hard currency and moderate incomes policies, were maintained, deficit spending as a discretionary, strategy was given up, But, although the Austrian economy has been put under much competitive pressure owing t o a continuous appreciation of the schilling along with the Deutschmar k its macroeconomic performance has been at least as good as the Europ ean or OECD average, but with lower unemployment.