Tag Archives: Effective Demand

Keynes’s finance, the monetary and demand-led circuits: a Sraffian assessment Working Paper n.851 - Marzo 2021Sergio Cesaratto DEPS, USiena Riccardo Pariboni DEPS, USiena Abstract This paper aims to stimulate the convergence of the Sraffian approach to demand-led growth theory with insights from monetary circuit theory and stock-flow models. The first Sraffian contribution to this convergence we...

Michael Roberts reviews and critiques The Debt Delusion by John Weeks.Michael Roberts Blog — blogging from a marxist economistThe debt delusionMichael Roberts

For at least a few moments this week, President Trump suggested a payroll tax cut to stimulate the stalling macroeconomy. Although it appears that he has already changed his mind, it’s worth taking a look at the strategy...just in case. Let’s say for sake of argument that the negative signals we have received of late are accurate. What should we do if we slip into full-fledged recession? Cut interest rates? Lower the budget deficit? Decrease payroll taxes? It turns out that the last one is...

Changes in expenditure rather than changes in the money stock are causal in economic performance. Changes in money stock do not necessarily result in changes in expenditure. Velocity of money depends on liquidity preference. If the money stock increases while the population increasingly desires to save rather than spend, no change in economic performance will follow. A chief point of the General Theory is that spending as "effective demand" drives an economy. As a consequence fiscal...

Like Keynes said.Lars P. Syll’s BlogThe causes of secular stagnation and the loanable funds theoryLars P. Syll | Professor, Malmo University

Brad rates this as a should-read. For anyone interested in Keynesianism, Post Keynesianism and MMT, the history of economics, or economic theory, it is a must-read. Conventional economists have apparently concluded that they don't need to read it if they even thought about, which most probably haven't, being under the spell of the "normal paradigm" in spite of its poor results empirically.Washington Center for Equitable GrowthJohn Maynard Keynes: Essays In Biography Brad DeLong Here...

A key purpose of demand-led growth theory is to extend the ‘principle of effective demand’ to contexts in which productive capacity is best considered variable rather than fixed. The central idea is that, over any time frame, it is demand that determines output, and demand-led variations in income that adjust planned leakages to planned injections. Once it is acknowledged that capacity is variable, it becomes clear that the adjustment of output to demand, and planned leakages to planned...

There is a psychological bias to believe that exceptional events eventually give way to a return to “normal times.” But the world economy is far from a return to pre-2008 normality, with most of the obstacles to more robust recovery to be found on the demand side. Project Syndicate The Normalization DelusionAdair Turner

I had discussed before the meaning of heterodox economics. I suggested a definition based on positive contributions (rather than as a critique of the mainstream) and based on concepts rather than schools of thought. In my view the two principles that were central for defining heterodoxy were the Principle of Effective Demand (PED), based on Keynes and Kalecki's ideas, and the idea that distribution is the result of class conflict, which in my view is best expressed in Sraffa's recovery of...