DOCSLIB.ORG

Eco 4114 Post-Keynesian Theory

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
Eco 4114 Post-Keynesian Theory ECO 4114 POST-KEYNESIAN THEORY: MONEY AND EFFECTIVE DEMAND Syllabus Instructor: Marc Lavoie January 2006 Office: 200 Wilbrod St., Room 08A Tuesday: 17:30 - 20:20 Telephone: 562 5800 (ext. 1687) E-mail: [email protected] Office hours: Tuesday: 14:30- 16:00 or by appointment Email: [email protected] Website: http://aix1. uottawa. ca/~robinson/Lavoie/index. html COURSE OBJECTIVES In this course I shall present approaches, theories and models, which are generally ignored by orthodox theory, i.e., what has been taught in intermediate micro and macro. This alternative approach to neoclassical economics is called post-Keynesian theory. The main objective of this course is to show that a coherent and powerful alternative to mainstream theory can be built; and that this alternative relies on the works of Keynes, Kalecki and the classical authors, as developed by economists such as Joan Robinson, Nicholas Kaldor, Luigi Pasinetti and Paul Davidson. The emphasis will be on the positive contributions of this tradition. For those who wish to oppose mainstream economic policies, i.e., the economic policies endorsed by the establishment (austerity policies, zero-inflation policies, downsizing, salary cuts, social program cuts, the ‘Washington consensus’, etc.), post-Keynesian economics offers a solid theoretical economic background. It also turns out that some aspects of post-Keynesian consumer theory are key aspects of heterodox environmental economics. Students that have absolute faith in market mechanisms or who are likely to become angered or annoyed when listening to implicit or explicit criticisms of what they have taken great pains to learn in previous courses are advised to drop the course and take something else. 2 TEXTBOOK There is one recommended text, which is a book of short readings, which has been ordered from the Bookstore: J.E. King (ed.), The Elgar Companion to Post Keynesian Economics, Edward Elgar Pub., 2003, paperback. French readers may find it useful to use my introduction to post-Keynesian (PK) economics, a few copies of which can also be found at the Bookstore: M. Lavoie, L’économie postkeynésienne, La Découverte (Repères), 2004. This book is in the process of being translated for Macmillan/Palgrave, under the title Introduction to Post-Keynesian Economics, and I will put up the translation on my website as it becomes available. OTHER USEFUL GENERAL PK REFERENCES There are several post-Keynesian textbooks, which students may wish to consult. Most of them are on reserve at the Morisset Library. Marc Lavoie, Foundations of Post-Keynesian Economic Analysis, Edward Elgar, Aldershot (U.K.), 1992. Holt and Pressman (eds), A New Guide to Post Keynesian Economics, Routledge, 2001. Lee, Frederic S., Post Keynesian Price Theory, Cambridge University Press, 1998. Paul Downward, Pricing Theory in Post Keynesian Economics, Edward Elgar, 1999. T.I. Palley, Post Keynesian Economics: Debt, Distribution and the Macro Economy, London : Macmillan Press, 1996. Paul Davidson, International Money and the Real World, Macmillan, 1982. Paul Davidson, Post Keynesian Macroeconomic Theory, Edward Elgar, 1994. Philip Arestis, Post-Keynesian Approach to Economics, Edward Elgar, 1992. Fernando J. Cardim de Carvalho, Mr Keynes and the Post Keynesians, Edward Elgar, 1992. 3 Alfred S. Eichner, The Macrodynamics of Advanced Market Economies, M.E. Sharpe, 1987 (1992). Peter J. Reynolds, Political Economy: A Synthesis of Kaleckian and Post Keynesian Economics, Wheatsheaf, Sussex, 1987. Louis-Philippe Rochon, Credit, Money and Production: An Alternative Post-Keynesian Approach, Edward Elgar, Cheltenham, 2000. Engelbert Stockhammer, The rise of Unemployment in Europe: A Keynesian Approach, Edward Elgar, Cheltenham, 2004. Phil A. O’Hara (ed.), Encyclopedia of Political Economy, 2 volumes, Routledge, Londres, 1999 (2001 paperback). These two books are to be found in the reference section of the Morisset Library. WEBSITES Here are a few suggestions of interesting websites that provide an extensive amount of information regarding heterodox economics and critiques of mainstream economics. Check the sites listed at: http://aix1.uottawa.ca/~robinson/english/other_links.htm Check also: The heterodox network: http://www.open.ac.uk/socialsciences/hetecon/index.htm The Post-Autistic Network: http://www.paecon.net/ A funny and original, but also informative, website, that of Aussie Steve Keen: http://www.debunking-economics.com/ STUDENT EVALUATION (i) a mid-term exam [25%] (ii) a final exam [45%]; (iii) a term paper [30%]; (iii) the outline of the term paper and participation [5%]; 4 The due date for the term paper is Tuesday March 21st 2006. The paper should be around 3500 words. The paper should be printed in 12 pt font, double-spaced or with 1½ spacing. There are about 250 words in a double-spaced page. Penalties will be awarded to papers which are not given on time. There will be a 20% penalty per office day late. There is another deadline: each student must present a written document (about one page), by February 14th, with an outline of the paper, and a bibliography of the documents which the student plans to use. An appointment must be taken before February 14th, during which the student will explain and justify the written document. Students who present an outline demonstrating that work is in good progress will get a high grade. In all cases the chosen topic must be approved. Students who hand in an essay based on an unapproved topic will get a zero mark for the term paper. Suggested topics for the essays: King’s Elgar Companion to Post Keynesian Economics (2003) provides about 80 entries on various topics, and is a useful source of essay topics and starting bibliographies. Your best bet is to find a topic within one or a couple of the entries listed in that book. Papers will be marked according to the following criteria; (i) quality of presentation (typed, fonts, footnotes, lack of typos, clear sections and subsections) (ii) fluidity of style, lack of spelling and grammar mistakes (iii) the depth of the paper (how deeply the topic has been covered, the quality of the analysis, not superficial) (iv) the width of the paper (whether the paper covered a lot of ground, and took several different sources into account) (v) the quality and extent of references (and whether standard norms of scientific papers were followed (see the references as they are presented in the King (2003) book) (vi) whether the topic pursued was the approved topic (vii) whether the paper was given on time You will find a complete guide about how to write a dissertation or an essay (references, etc.) on the following web site: http://www.sciencessociales.uottawa.ca/guide-en.asp The guide also explains what is plagiarizing. Check for the definition of plagiarism. Do not plagiarize. COURSE OUTLINE There are 12 lectures, one of which will be devoted to the mid-term exam. All dates are tentative. Most of the references can be found through the Library electronic journals. op.cit. means that the reference is part of the books to be found on reserve, as listed above. 1. An overview of post-Keynesian economics (Jan. 10) King (2003): Austrian School, Babylonian mode of thought, Bastard Keynesianism, Cambridge economic tradition, critical realism, Fundamentalist Keynesians, Institutionalism, Kaldorian Economics, Kaleckian Economics, Marginalism, New Classical Economics, New Keynesian Economics, Non-ergodicity, Time in economic theory, Uncertainty M. Lavoie (1992), ch. 1 (pp. 1-19). Lavoie (2004), ch.1 L.L. Pasinetti 2005. “The Cambridge school of Keynesian economics”, Cambridge Journal of Economics, 29 (6), November, pp. 837-848. 5 M. Setterfield, 2003. “What is analytical political economy?”, International Journal of Political Economy, Summer, 33 (2), pp. 4-16. 2. The Cambridge controversies and empirical research (Jan. 17) King (2003): Capital theory, Sraffian economics. M. Lavoie (1992), ch. 1 (pp. 20-41). A. Shaikh, 1990. “Humbug production function”, in J. Eatwell et al. (Eds), The New Palgrave: Capital Theory, Macmillan, pp. 191-194. A. Shaikh, 2005. “Nonlinear dynamics and pseudo-production functions”, working paper, New School University, forthcoming in Eastern Economic Journal. Find article on: http://homepage.newschool.edu/~AShaikh/ M. Anyadike-Danes and W. Godley. 1989. “Real wages and employment: A sceptical view of some recent empirical work”, Manchester School, June, 57 (2), pp. 172-187. 3. Microeconomics: An alternative theory of household choice (Jan. 24) King (2003): consumer theory M. Lavoie (1992), ch. 2. Lavoie (2004), ch. 2 part 1. R. Roy, 2005. “The hierarchy of needs and the concept of groups in consumer choice theory [1943]”, History of Economics Review, Summer, 42, pp.50-56. M. Lavoie, 2004. “Post-Keynesian consumer theory: Potential synergies with consumer research and economic psychology”, Journal of Economic Psychology, vol. 25 (5), pp. 639-649. John M. Gowdy and Kozo Mayumi,2001. “Reformulating the foundations of consumer choice theory and environmental valuation”, Ecological Economics, 39 (2), pp. 223-237. Alfred S. Eichner, 1992, op.cit., ch. 9: The household sector: expenditures and cash balances. 4. Microeconomics: objectives of firms (Jan. 31) King (2003): Competition M. Lavoie (1992), ch. 3, pp. 94-118. Lavoie (2004), ch. 2, part 2. E. Stockhammer, 2004. “Financialization and the slowdown of accumulation”, Cambridge Journal of Economics, 28 (5), pp. 719-741. John Kenneth Galbraith, Economics and the Public Purpose, Pelican Books, 1975 (1973), ch. 9- 10, pp. 108-125. 6 5. Microeconomics: cost and pricing theory (Feb. 7) King (2003): marginalism, pricing and prices, production M. Lavoie (1992), ch. 3, pp. 118-148. Lavoie (2004), ch. 2, parts 3-6. M. Lavoie, “Pricing”, in Holt and Pressman, op. cit., ch. 3. Andrews, P.W.S. 1949. “A reconsideration of the theory of the individual business”, Oxford Economic Papers, 1 (1), pp. 54-89. D. Amirault et al. 2004-2005. “A survey of the price-setting behaviour of Canadian companies”, Bank of Canada Review, Winter, pp.
Load more

Recommended publications
  • A Rejoinder to Tily Marc Lavoie*
    A rejoinder to Tily Marc Lavoie* As everyone knows, Keynes’s General Theory has generated a lot of different interpretations. Geoff Tily presents a brief statement of his own understanding of it in his comment to my paper and he questions my perspective. There are also different strands of post-Keynesianism, as I have myself explained in a number of places. Tily is closest to what has been called Fundamentalist Post Keynesianism. Tily is annoyed at my use of the word pirouette when authors such as himself try to make a distinction between a given, a constant or an exogenous money supply.1†Besides this, I believe his main point is that the General Theory was all about liquidity preference, that Keynes was more concerned with monetary policy than fiscal policy and that he favoured a cheap money policy. A quote that often comes to my mind is Keynes’s (1936, p. 322) claim that “the remedy for the boom is not a higher rate of interest but a lower rate of interest!”. Thus I would certainly agree with Tily in this regard. But Keynes (1936, p. 320) also said that “there is, indeed, force in the argument that a high rate of interest is much more effective against a boom than a low rate of interest against a slump”, reinforcing the belief among many of us that monetary policy has limits that require the use of fiscal policy. Before the Great Recession and much before neoclassical Keynesians started relying on the interest rate zero-lower bound, post-Keynesians – among which Fazzari (1994-95), Galbraith (1994-95) and Arestis and Sawyer (2004) – have endorsed the relevance of fiscal policy at a time when mainstream economist were denying it.
    [Show full text]
  • Heterodox Economics Newsletter Issue 210 — March 06, 2017 — Web1 — Pdf2 — Heterodox Economics Directory3
    Heterodox Economics Newsletter Issue 210 | March 06, 2017 | web1 | pdf2 | Heterodox Economics Directory3 While many standard economists would argue that an increase in the intensity of compe- tition brings forth superior social outcomes, only few of them have noted that their own field - academic economics - exhibits tendencies running contrary to this claim. While it has not gone unnoticed that the conjoined forces of 'publish or perish' and a highly stratified academic culture in economics continuously intensify competitive pressures (an issue also addressed in my last editorial4 ), the effects of this increase in competitive pressure have only rarely been studied systemically. Luckily, a fine paper by Sarah Necker5 addresses this shortcoming and provides a first and preliminary glimpse on the coping strategies developed in academic economics. Here is a selective quote summarizing her findings: "About one fifth admits to having refrained from citing others' work that contradicted the own analysis [...]. Even more admit to questionable practices of data analysis (32{38%), e.g., the 'selective presentation of findings so that they confirm one's argument.' Having complied with suggestions from referees despite having thought that they were wrong is reported by 39% (CI: 34{44%). Even 59% (CI: 55{64%) report that they have at least once cited strategically to increase the prospect of publishing their work. According to their responses, 6.3% of the participants have never engaged in a practice rejected by at least a majority of peers." These ethical deficiencies stand in stark contrast to the increasing technical sophisticat- edness in empirical economics, especially because the latter might actually be exploited to achieve 'publishability' (an issue also touched upon in past editorials, e.g.
    [Show full text]
  • Towards a Post-Keynesian Consensus in Macroeconomics: Reconciling the Cambridge and Wall Street Views
    Towards a post-Keynesian consensus in macroeconomics: Reconciling the Cambridge and Wall Street views Marc Lavoie 1. Introduction The current financial crisis, which started to unfold in August 2007, is a reminder that macroeconomics cannot ignore financial relations, other- wise financial crises cannot be explained. Several authors have underlined the apparent tensions that have ex- isted between the so-called American Post Keynesians and the Cam- bridge Keynesians. The former, also known as the Fundamentalist post- Keynesians, are mainly concerned with money, debt, liquidity, interest Kommentar [TN1]: Author: If I under- stand your differentiation between the rates, and cash flow issues that characterised an uncertain world domi- American Post Keynesians and the British post-Keynesians right, and if you normally nated by financial markets. This also came to be known as Wall Street use “post-Keynesian”, this should read Keynesianism or Financial Keynesianism. By contrast the Cambridge either “fundamentalist post-Keynesians” or -- as a name -- “Fundamentalist Post Keynesians are associated with the Kaleckian and Kaldorian strands of Keynesians” or maybe – as in the conclu- sions – “fundamentalist Post Keynesians”. post-Keynesianism, along with the neo-Ricardian (or Sraffian) Keynesi- Could you please check? ans. The Cambridge Keynesians focussed on real issues, mainly through growth models, being concerned with technical choice, income distribu- tion, rates of capacity utilisation, pricing, normal and realised profit rates. Several observers have pointed out that they could see little homogeneity in the economic views and methods of these two broad groups of hetero- dox Keynesians. The purpose of the present paper is to show that while these differ- ences have certainly existed in the past, the potential for some reconcilia- tion between these two main views of the economy has always existed, and that some large efforts have been made over the last two decades to 76 Marc Lavoie effectively link the Cambridge and the Wall Street views.
    [Show full text]
  • Groupes Sociaux Et Intervention Sociale
    EXPLORATIONS IN MONETARY ECONOMICS ECO 6183 MARC LAVOIE FALL 2015 Course schedule: Wednesday 14:30 – 17:20 Course location : Social Sciences building 9003 Office : Social Sciences building 9054 Office hours : or by appointment Phone : 613 562-5800 (extension 1687) E-mail: [email protected] Website : http://www.socialsciences.uottawa.ca/eco/eng/profdetails.asp?id=64 OFFICIAL COURSE DESCRIPTION Explorations in theory, policy recommendations, and empirical study. Course material challenges traditional approaches by examining such topics as the endogeneity of money, the role of credit, financial instability, the circuit approach, flow-of-funds analysis, sectoral stock-flow coherence, and functional finance. GENERAL COURSE OBJECTIVES To demonstrate that there exists an alternative and coherent view of money and monetary economics which is distinct from the standard neoclassical framework: the post-Keynesian monetary theory; to understand what the major features of this alternative are; to understand the operational framework of the Bank of Canada as well as the clearing and settlement system; and to understand the implications of the subprime financial crisis for the operating procedures of central banks. A large section of the course will be devoted to making sure that the accounting of macroeconomic models is right. Every financial asset has a counterpart liability; and budget constraints for each sector describe how the balance between flows of expenditure, factor income and transfers generate counterpart changes in stocks of assets and liabilities. The accounts should be comprehensive in the sense that everything comes from somewhere and everything goes somewhere, or to put it more formally, all stocks and flows can be fitted into matrices in which columns and rows all sum to zero.
    [Show full text]
  • Who Cares About Housing Anyway?
    1 Curtin University of Technology School of Economics and Finance Working Paper Series 05:13 Who cares about housing anyway? by A. M. Dockery School of Economics and Finance, Curtin University of Technology, GPO Box U1987, Perth WA 6845 Ph. 61-8-92663350 Fax. 61-8-92663026 Email: [email protected] and N. Milsom ISSN 1035-901X ISBN 1 740673980 1 2 Who cares about housing anyway? A. M. Dockery and N. Milsom Curtin Business School, Curtin University of Technology Address for correspondence: Dr. Mike Dockery, Curtin Business School GPO Box U1987, Perth WA 6845 [email protected] Abstract To own your own home is popularly seen as the ‘great Australian dream’. Since the 1980s the proportion of median family income spent on housing has increased markedly. Some economists consider housing to be a prime example of conspicuous consumption – the tendency to spend on goods and service to signal social success or status. Clearly, housing is an intricate component of the socio-economic landscape. Previous literature has shown housing to be an important medium in connecting people to life’s opportunities. ‘Housing’ as it relates to the physical amenity of the building and neighbourhood can be distinguished from ‘the home’ which incorporates a sense of family and belonging, expresses values and provides a sphere of individual control. The home is important in meeting psychological needs and strongly influences young peoples’ later outcomes in life. However, research addressing the specific question of how important one’s own home is to different individuals and why is sparse from either an economic or psychological perspective.
    [Show full text]
  • Dirk Ehnts, the Euro Zone Crisis: What Would John Maynard
    Institute for International Political Economy Berlin The euro zone crisis: what would John Maynard do? Author: Dirk Ehnts Working Paper, No. 72/2016 Editors: Sigrid Betzelt Trevor Evans Eckhard Hein Hansjörg Herr Birgit Mahnkopf Christina Teipen Achim Truger Markus Wissen The euro zone crisis: what would John Maynard do? Dirk H. Ehnts Abstract: In his letter to US President Franklin D. Roosevelt Keynes (1933) wrote about „the technique of recovery itself‟. An increase in output is brought about by an increase in purchasing power, Keynes argues, which can come from three sectors: households, firms and government. Using the IS/MY macroeconomic model developed by Ehnts (2014), which features sectoral balances and endogenous money, the situation of some euro zone members is examined with a focus on the three techniques of recovery: increases in debt of the respective sectors as defined by Keynes. A fourth technique, an increase in spending by the rest of the world, is added. The conclusion is that the policy recommendation given by Keynes in his letter also holds for the euro zone at present: a rise in debt-financed government expenditure. Some reform at the institutional level in Europe would enable „the technique of recovery‟ to work via the TARGET2 payment system, which is organized along Keynes‟ International Clearing Union proposal and a solid foundation to build on. Keywords: deficit spending, fiscal policy, sectoral balances, Keynes, Keynesian economics JEL classification: E12, E32, E62 Contact: Dr. rer. pol. Dirk H. Ehnts Lecturer at Bard College Berlin Platanenstrasse 24 13156 Berlin Germany e-mail: [email protected] 1 1.
    [Show full text]
  • The Monetary and Fiscal Nexus of Neo-Chartalism: a Friendly Critique
    JOURNAL OF ECONOMIC ISSUES Vol. XLVII No. 1 March 2013 DOI 10.2753/JEI0021-3624470101 The Monetary and Fiscal Nexus of Neo-Chartalism: A Friendly Critique Marc Lavoie Abstract: A number of post-Keynesian authors, called the neo-chartalists, have argued that the government does not face a budget constraint similar to that of households and that government with sovereign currencies run no risk of default, even with high debt-to-GDP ratio. This stands in contrast to countries in the eurozone, where the central bank does not normally purchase sovereign debt. While these claims now seem to be accepted by some economists, neo-chartalists have also made a number of controversial claims, including that the government spends simply by crediting a private-sector-bank account at the central bank; that the government does need to borrow to deficit-spend; and that taxes do not finance government expenditures. This paper shows that these surprising statements do have some logic, once one assumes the consolidation of the government sector and the central bank into a unique entity, the state. The paper further argues, however, that these paradoxical claims end up being counter-productive since consolidation is counter-factual. Keywords: central bank, clearing and settlement system, eurozone, neo-chartalism JEL Classification Codes: B5, E5, E63 The global financial crisis has exposed the weaknesses of mainstream economics and it has given a boost to heterodox theories, in particular, Keynesian theories. The mainstream view about the irrelevance of fiscal activism has been strongly criticized by the active use of fiscal policy in the midst of the global financial crisis.
    [Show full text]
  • Review of Marc Lavoie, Post-Keynesian Economics, New Foundations, Cheltenham: Edward Elgar, 2014, Pp
    Review of Marc Lavoie, Post-Keynesian Economics, New Foundations, Cheltenham: Edward Elgar, 2014, pp. 660. John McCombie, University of Cambridge I am delighted to have been invited to present a discussion of Marc Lavoie’s Post- Keynesian Economics, New Foundations today. I was contemplating to whether to give my short review, “it’s a brilliant book, you must buy it” or my longer and more considered review “it’s a brilliant book, you must buy it and I wish I had written it”! However, I fear I must justify these conclusions a little more, but I hope you will excuse me if I use this opportunity to range a little more widely than is usual in a book review to reflect on the state and future of Post-Keynesian economics. Economists, certainly neoclassical economists, never pay much, if any attention, to economic methodologists except to the extent they may have read, in passing, Milton Friedman’s classic, but misleading, “Essay in Positive Economics”. This reassures them no matter how absurd, or unrealistic, the assumptions of their models, they represent an advance in the subject so long as the models are not refuted by empirical testing. Of course, the latter qualification that they need to pass empirical testing is often implicitly interpreted as “sometime in the unspecified future”, or is overlooked altogether. But perhaps we should not be surprised that economic methodologists, in effect, write solely for each other, because this is certainly true of the physical sciences. There are no courses in the philosophy of science in the core natural science disciplines at, say, the University of Cambridge.
    [Show full text]
  • Download PDF (312.2
    European Journal of Economics and Economic Policies: Intervention, Vol. 15 No. 1, 2018, pp. 2–11 ‘The vigorous critique of the neo-Kaleckian or post- Kaleckian growth model is a measure of its success’ Interview with Marc Lavoie Marc Lavoie is a Senior Research Chair of the University of Sorbonne Paris Cité, located at the University of Paris 13, and he is a member of the Centre d’Économie de Paris- Nord (CEPN), France. Between 1979 and 2016 he taught at the University of Ottawa, Canada, where he is now an emeritus professor. He received a ‘doctorat honorifique’ from the University of Paris 13, France, in 2015. He is one of the managing editors of Metroeconomica and of the European Journal of Economics and Economic Policies: Intervention, and he is an IMK and FMM fellow. His latest work is Post-Keynesian Economics: New Foundations (2014) – an exhaustive account of post-Keynesian economic theory – for which he received the 2017 Myrdal Prize of the European Asso- ciation for Evolutionary Political Economy. How did you get interested in post-Keynesian or heterodox economics and how did you get in contact with post-Keynesian economists? I was a student at Carleton University, in Ottawa. I had chosen to go to this English- speaking university because I feared that I would be frustrated by not getting enough classes in French at the University of Ottawa, which is a bilingual university. At Carleton I knew everything would be in English anyway. In my fourth year, there was an honours seminar which was run by Tom Rymes – T.K.
    [Show full text]
  • Curtin University of Technology School of Economics and Finance Working Paper Series 05:10
    Curtin University of Technology School of Economics and Finance Working Paper Series 05:10 Growth, Commodity Prices, Inflation and the Distribution of Income* by Harry Bloch School of Economics and Finance, Curtin University of Technology, GPO Box U1987, Perth WA 6845 Ph. 61-8-92662035 Fax. 61-8-92663026 Email: [email protected] A. Michael Dockery Curtin University of Technology C. Wyn Morgan University of Nottingham and David Sapsford University of Liverpool ISSN 1035-901X ISBN 1 740673891 Growth, Commodity Prices, Inflation and the Distribution of Income* by Harry Bloch Curtin University of Technology A. Michael Dockery Curtin University of Technology C. Wyn Morgan University of Nottingham and David Sapsford University of Liverpool Correspondence to: Professor Harry Bloch School of Economics and Finance Curtin University of Technology GPO Box U1987 Perth WA 6845 AUSTRALIA Telephone: 61-8-9266-2035 Fax: 61-8-9266-3026 Email: [email protected] * Financial support from the Australian Research Council through Curtin University of Technology is gratefully acknowledged. Dr. Tim Lloyd of the University of Nottingham provided assistance with the estimation. Previous versions of this paper were presented at the Department of Economics, University of Aberdeen and at the conference, Economic Growth and Distribution: on the Nature and Causes of the Wealth of Nations, in Lucca, Italy. We acknowledge helpful comments from the audience at both presentations and from our discussant at Lucca, Carlo Panico, as well as from anonymous referees. All errors and omissions are solely the responsibility of the authors. 2 1. Introduction Prebisch (1950) and Singer (1950) argue that the structure of the world economy leads to long-run deterioration in the net barter terms of trade for primary commodity producers in developing countries in their trade with manufacturers in industrialized countries.
    [Show full text]
  • New from Edward Elgar Publishing Theories of Money and Banking Edited by L
    NEW FROM EDWARD ELGAR PUBLISHING Theories of Money and Banking Edited by L. Randall Wray, Professor of Economics, University of Missouri-Kansas City, Senior Scholar, Levy Economics Institute and Research Director, Centre for Full Employment and Price Stability, US ‘Randall Wray’s two volumes provide a bright beacon in a darkening night of turmoil, confusion and ignorance. By bringing together classics from both the mainstream and TO ORDER THIS TITLE, heterodox approaches to monetary theory and policy, Wray PLEASE CONTACT: provides a fundamental resource for the urgently needed Edward Elgar Publishing Inc. rethink on how the interrelated world of monetary production PO Box 960 economies functions or misfunctions, and also a basis for Herndon, VA 20172-0960 US the development of a sound theory on how to erect effective Tel: (800) 390-3149 policies for tackling major, potentially disastrous problems.’ Fax: (703) 996-1010 – Geoffrey Harcourt, University of New South Wales, Australia [email protected] This authoritative two-volume collection brings together FOR INFORMATION, the most important contributions to theories of money and PLEASE CONTACT: banking written over the past century. Professor Wray covers a number of key topics including the historical debates about The Sales & Marketing Department the nature of money, the role money and financial institutions play in the economy Edward Elgar Publishing Inc. and monetary policy formation. A wide variety of approaches to money and banking The William Pratt House 9 Dewey Court are featured, among which are Monetarist, Keynesian, Marxian, Post-Keynesian and Northampton, MA 01060-3815 US Institutionalist, and the New Monetary Consensus. Also included are a number of Tel: (413) 584-5551 chapters presenting General Equilibrium, Chartalist or State Money, and Circuitiste Fax: (413) 584-9933 views.
    [Show full text]
  • The Post-Keynesian Economics of Credit and Debt Marc Lavoie
    The post-Keynesian economics of credit and debt Marc Lavoie Department of Economics, University of Ottawa November 2012 To take a not at all arbitrary example, a standard macroeconomic approach, the IS-LM model (don’t ask) told us that under depression-type conditions like those we’re experiencing, some of the usual rules would cease to apply: trillion-dollar budget deficits wouldn’t drive up interest rates, huge increases in the money supply wouldn’t cause runaway inflation. Economists who took that model seriously back in, say, early 2009 were ridiculed and lambasted for making such counterintuitive assertions. But their predictions came true. So yes, it’s possible to have social science with the power to predict events and, maybe, to lead to a better future. Paul Krugman, “Introduction” to Isaac Asimov, The Foundation Trilogy, The Folio Society, London, 2012, p. xv. Paul Krugman believes that it is enough to go back to the old IS-LM model to understand how the economy functions and to make predictions about what is about to happen. He is partially right and partially wrong. Certainly the current sophisticated models put forward by most of his mainstream colleagues did not allow for correct predictions. However, although we need to go back to macroeconomics before the new classical and rational expectations revolution, thus going beyond the representative agent with rational expectations (RARE as John King (2012) calls it), we certainly should not go back to the simple IS/LM model that Krugman is so enamoured with. The purpose of the session on the economics of credit and debt is to stimulate new thinking on credit and debt.
    [Show full text]