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Tag Archives: Post Keynesian Economics

Brian Romanchuk — Primer: Understanding the Post-Keynesian Rejection of Mainstream Inflation Theory

From the Perspective of Conventional Economic Analysis, the Post-Keynesian Approach to Inflation Is Mystifying. If We Focus on the Modern Monetary Theory (MMT) School of Thought in Particular, It Is Very Easy to Either Find Claims That "MMT Has No Theory of Inflation," or Non-MMTers "Explain" the MMT Inflation Theory Is Some Random Trivial Relationship That They Just Made Up. The Key to Understanding Post-Keynesian Approaches Is That It Takes a Completely Different Approach to Understanding...

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Asad Zaman — Simple Model Explains Complex Keynesian Concepts

Not MMT, but you may find this of interest. In the context of the radical Macroeconomics Course I am teaching, I was very unhappy with the material available which tries to explain what Keynes is saying. In attempting to explain it better, I constructed an extremely simple model of a primitive agricultural economy. This model has a lot of pedagogical value in that it can demonstrate many complex phenomenon in very simple terms. In particular, Keynesian, Marxists, Classical and...

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Simon Wren-Lewis — How China beat the Global Financial Crisis

Basic macroeconomic theory says that a negative shock to GDP, caused for example by falling exports, can be completely offset by a monetary and fiscal stimulus. China is a good example of that idea in action. What about all the naysayers who predicted financial disaster if this was done? Well there was a mini-crisis in China half a dozen years later, but it is hard to connect it back to stimulus spending and it had little impact on Chinese growth. What about the huge burden on future...

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David Ruccio — Utopia and macroeconomics

From the beginning, mainstream macroeconomics has been a battleground between the visible and the invisible hand. Keynesian macroeconomics, represented on the left-hand side of the chart above, has an aggregate supply curve with a long horizontal section at levels of output (Y or real GDP) below full employment (Yfe). What this means is that the aggregate demand determines the actual level of output, which can be and often is at less than full employment (e.g., when AD falls from AD1 to...

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Seth Sandronsky — Gov. Brown, Meet Mr. Keynes

Non-sequitur. Sandronsky criticizes Jerry Brown for being anti-Keynesian and then admits that US states don't have the same fiscal space as the general government. Why then does Gov. Brown ignore Keynes’ insights on government or state spending to spur the economy? One reason is that state governments are unable to run deficits in the way that Uncle Sam can. Another is that Gov. Brown is reserving state revenue to repay Wall St. creditors in a downturn. The state issues bonds that these...

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Peter Cooper — A Notion of Demand-Led Growth

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...

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Ralph Musgrave — What’s the optimum amount of national debt?

Roger Farmer is out with an argument for the optimal level of public debt being 70% of GDP. Ralph provides the MMT answer. It is nicely succinct. MMTers have solved this one. Others are still floundering, in particular Roger Farmer in this NIESR article on the subject, is all over the place far as I can see (1). So I’ll run thru this vexed question for the umpteenth time.... Farmer bills himself as a Keynesian. Ralph reminds us of the answer Keynes himself gave to the question of public...

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