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on Post Keynesian Economics |
| By: | Roy H Grieve (Department of Economics, University of Strathclyde) |
| Abstract: | The purpose of this paper is to highlight the curiously circular course followed by mainstream macroeconomic thinking in recent times. Having broken from classical orthodoxy in the late 1930s via Keynes’s General Theory, over the last three or four decades the mainstream conventional wisdom, regressing rather than progressing, has now come to embrace a conception of the working of the macroeconomy which is again of a classical, essentially pre-Keynesian, character. At the core of the analysis presented in the typical contemporary macro textbook is the (neo)classical model of the labour market, which represents employment as determined (given conditions of productivity) by the terms of labour supply. While it is allowed that changes in aggregate demand may temporarily affect output and employment, the contention is that in due course employment will automatically return to its ‘natural’ (full employment) level. Unemployment is therefore identified as a merely frictional or voluntary phenomenon: involuntary unemployment - in other words persisting demand-deficient unemployment - is entirely absent from the picture. Variations in aggregate demand are understood to have a lasting impact only on the price level, not on output and employment. This in effect amounts to a return to a Pigouvian conception such as targeted by Keynes in the General Theory. We take the view that this reversion to ideas which should by now be obsolete reflects not the discovery of logical or empirical deficiencies in the Keynes analysis, but results rather from doctrinaire blindness and failure of scholarship on account of which essential features of the Keynes theory have been overlooked or misrepresented. There is an urgent need for a critical appraisal of the current conventional macroeconomic wisdom. |
| Keywords: | Keynes’s General Theory, ‘classical’ macroeconomics, involuntary unemployment, the AD/AS model |
| JEL: | B12 B22 E13 |
| Date: | 2014–01 |
| URL: | http://d.repec.org/n?u=RePEc:str:wpaper:1401&r=pke |
| By: | Wolfgang Fellner; Clive L. Spash |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wiwsre:sre-disc-2014_02&r=pke |
| By: | Mark Weisbrot; Stephan Lefebvre; Joseph Sammut |
| Abstract: | This paper compares the performance of the Mexican economy with that of the rest of the region over the past 20 years, based on the available economic and social indicators, and with its own past economic performance. Among the results it finds that Mexico ranks 18th out of 20 Latin American countries in growth of real GDP per person, the most basic economic measure of living standards; Mexico’s poverty rate of in 2012 was almost identical to the poverty rate of 1994; real (inflation-adjusted) wages for Mexico were almost the same in 2012 as in 1994; and unemployment has increased significantly. It also notes that if NAFTA had been successful in restoring Mexico’s pre-1980 growth rate – when developmentalist economic policies were the norm – Mexico today would be a relatively high income country, with income per person significantly higher than that of Portugal or Greece. It is unlikely that immigration reform would be a major political issue in the United States, since relatively few Mexicans would seek to cross the border. |
| Keywords: | mexico, nafta, trade, poverty, employment, inequality |
| JEL: | F F5 E E2 E6 F1 F4 F13 F16 F17 F18 |
| Date: | 2014–02 |
| URL: | http://d.repec.org/n?u=RePEc:epo:papers:2014-03&r=pke |
| By: | Miklós Antal; Jeroen van den Bergh |
| Abstract: | We raise fundamental questions about macroeconomics relevant to escaping the financial-economic crisis and shifting to a sustainable economy. First, the feasibility of decoupling environmental pressure from aggregate income is considered. Decoupling as a single environmental strategy is found to be very risky. Next, three main arguments for economic growth are examined: growth as progress, growth to avoid economic instability, and growth to offset unemployment due to labor productivity improvements. For each, we offer orthodox, heterodox and new responses. Attention is paid to progress indicators, feedback mechanisms affecting business cycles, and strategies to limit unemployment without the need for growth. Besides offering an economy-wide angle, we discuss the role of housing and mortgage markets in economic cyclicality. Finally, interactions between real economic and financial-monetary spheres are studied. This includes money creation, capital allocation and trade-offs between efficiency and operating costs of financial systems. Throughout, environmental and transition implications are outlined. |
| Keywords: | Financial-monetary system, GDP information, housing-mortgage markets, macroeconomics, positive and negative feedbacks, productivity trap |
| Date: | 2014–02 |
| URL: | http://d.repec.org/n?u=RePEc:feu:wfeppr:y:2014:m:2:d:0:i:10&r=pke |
| By: | Kakarot-Handtke, Egmont |
| Abstract: | Krugman has recently revitalized IS-LM with a number of succinct analytical pieces on his blog. The reverberations were remarkable. Economists, however, are known often not grasp the full content of their own and, a fortiori, of others’ models. This happened to Keynes in the days of high theory and to Krugman in these days. Keynes applied a defect formalism, which is here replaced by objective-structural axioms. This yields the correct relationship between retained profit, saving, and investment which in turn makes it clear after the event that the IS-part of the IS-LM construct never could bear any substantive theoretical load. |
| Keywords: | new framework of concepts; structure-centric; axiom set; Hicks; Allais |
| JEL: | B59 E12 E13 |
| Date: | 2014–02–11 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:53608&r=pke |