|
on Post Keynesian Economics |
| By: | Geoff C. Harcourt (School of Economics, Australian School of Business, the University of New South Wales) |
| URL: | http://d.repec.org/n?u=RePEc:swe:wpaper:2014-35&r=pke |
| By: | Ugo Pagano (Department of Economics, University of Siena, Italy); Massimiliano Vatiero (Institute of Law (IDUSI), Università della Svizzera italiana, Lugano, Switzerland) |
| Abstract: | One of the main contributions of Ronald H. Coase was to demonstrate how mainstream economics was based on a contradictory amalgam of costly physical inputs and free institutional resources, and to gave origin the economics of institutions: each institution is a mode of allocation and organization of economic resources that is to be investigated. In particular, none of the institutions (including the market) is a free lunch. The Coasian approach regards institutions as costly substitutes and provides a fundamental starting point for comparative institutional analysis. However, Coase neglected two issues deriving from the observation that institutions are not cost-free. First, when institutions are costly, one should not only consider their possible substitutes but also how complementary institutions affect their costs, as well as the costs of the possible institutional substitutes. Secondly, the economic analysis should also take into account that the transition from one institutional setup to another cannot occur in costless meta-institutions. The initial conditions may substantially affect the final institutional arrangements. Both the novelty of Coasian approach and its limits were grossly undervalued. The costly institutions assumption requires a view of economics as a historical discipline. |
| Keywords: | Ronald Coase, transaction costs, institutions, institutional complementarities |
| JEL: | B25 K0 |
| Date: | 2014–04 |
| URL: | http://d.repec.org/n?u=RePEc:lug:wpidep:1406&r=pke |
| By: | Reino Unido. Department for International Development |
| Date: | 2013–02–11 |
| URL: | http://d.repec.org/n?u=RePEc:ecr:col094:26108&r=pke |
| By: | Grieve, Roy H |
| 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, |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:edn:sirdps:546&r=pke |