nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2007‒11‒10
five papers chosen by
Karl Petrick
University of the West Indies

  1. A Post-Keynesian macroeconomic policy mix as an alternative to the New Consensus approach By Eckhard Hein; Engelbert Stockhammer
  2. Non-mainstream Economics: Research Abroad and in Korea By MAN-SEOP PARK
  3. Routes of Money Endogeneity: A Heuristic Comparison By MAN-SEOP PARK
  4. Novelty and the Bounds of Unknowledge in Economics By U. Witt
  5. The Instability and Inequities of the Global Reserve System By José Antonio Ocampo

  1. By: Eckhard Hein (IMK at the Hans Boeckler Foundation); Engelbert Stockhammer (Vienna University of Economics and Business Administration)
    Abstract: In a Post-Keynesian (PK) model we show that inflation targeting monetary policies, as the main stabilisation tool proposed by the New Consensus Model (NCM), in the short run are only adequate for certain values of the model parameters, but are either unnecessary, counterproductive, or limited in their effectiveness for other values. Taking into account medium-run cost and distribution effects of interest rate variations renders monetary policies completely inappropriate as an economic stabiliser. Based on these results we argue that the NCM macroeconomic policy assignment should be replaced by a PK assignment. Enhancing employment without increasing inflation will be possible if macroeconomic policies are coordinated along the following lines: The central bank targets distribution between rentiers, on the hand, and firms and employees, on the other hand, and sets low real interest rates, wage bargaining parties target inflation and fiscal policies are applied for short- and medium-run real stabilisation purposes.
    Keywords: Macroeconomic policies, New Consensus Model, Post-Keynesian Model, inflation targeting
    JEL: E12 E50
    Date: 2007
  2. By: MAN-SEOP PARK (Department of Economics, Korea University)
    Abstract: This paper surveys the research trends and activities abroad and in Korea since 1980s in the area of '(Non-Marxian) non-mainstream economics', mainly classified into Sraffian Economics and Post-Keynesian Economics. Research in Sraffian Economics is examined under the topics of long-period effective demand, technical change, monetary distribution and other; and Post-Keynesian Economics under the topics of endogenous money, administered prices, Kaleckian growth and distribution models, stock-flow consistent models, Keyne's philosophy and others.
    Keywords: Non-mainstream economics, Sraffian economics, Post-Keynesian economics
    Date: 2007
  3. By: MAN-SEOP PARK (Department of Economics, Korea University)
    Abstract: The paper sets up an analytical framework which is based on simplified balance sheets of the banking, the non-banking private and the government sectors, in order to identify four primary routes through which money can be generated endogenously and to discuss their characteristics. These routes approximate, if not precisely correspond to, the Post Keynesian accommodationist and structuralist views, the New Keynesian credit view (¡°bank lending channel¡±), and a hybrid one.
    JEL: E12 E51
    Date: 2007
  4. By: U. Witt
    Abstract: The emergence of novelty is a driving agent for economic change. New technologies, new products and services, new institutional arrangements, to mention a few examples, are the backbone of development and growth. Important though it is, the emergence of novelty is not well understood. What seems to be clear, however, is that it implies “bounds of unknowledge” (Shackle) that impose epistemological and methodological constraints on economic theorizing. In this paper, the problems will be examined, possibilities for positively theorizing about novelty will be explored, and the methodological consequences for causal explanations and the modeling of economics dynamics will be discussed.
    Keywords: novelty, epistemic bounds, causation, dynamical systems, economic change, evolution Length 20 pages
    JEL: B41 C61 D83 O30 O31
    Date: 2007–11
  5. By: José Antonio Ocampo
    Abstract: This paper argues that the current global reserve system is inherently unstable due to the use of a national currency as the major international reserve currency, and the high demand for “self-insurance” by developing countries. The latter is due to the mix of highly pro-cyclical capital flows and the limited room to maneuver that developing countries have to manage counter-cyclical macroeconomic policies. Both features imply that the system is also inequitable. An important insight of the paper is that such inequities feed into the instability of current arrangements. Any meaningful reform of the system must therefore address these two interlinked features.
    Keywords: Global reserve currency, seigniorage powers, financial volatility, pro-cyclical macroeconomic policies, self-insurance, inequities of international economic order
    JEL: F02 F33
    Date: 2007–11

This nep-pke issue is ©2007 by Karl Petrick. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.