Post Keynesian economics : debt, distribution, and the macro economy

This book provides an important and original statement of Post Keynesian macroeconomic theory, focusing on the significance of privately created inside debts and income distribution for the determination of economic activity. The material is presented in a clear and accessible format. This book provides an important and original statement of Post Keynesian macroeconomic theory, focusing on the significance of privately created inside debts and income distribution for the determination of economic activity. The material is presented in a clear and accessible format Cover......Page 1 Half-Title......Page 2 Title......Page 4 Copyright......Page 5 Contents......Page 6 List of Figures and Tables......Page 9 Preface......Page 12 Acknowledgements......Page 15 1 Introduction......Page 16 2.1 Introduction......Page 23 2.2 Theoretical coherence......Page 24 2.3 Institutional coherence......Page 32 2.4 Epistemological coherence......Page 36 3.1 Introduction......Page 40 3.2 Demand determined equilibrium versus supply constrained equilibrium......Page 41 3.3 General equilibrium, the Keynesian revolution, and the revival of "supply constraint" economics......Page 48 3.4 Conclusion......Page 54 4.1 Introduction......Page 56 4.2 A digression on money and macroeconomic theory......Page 57 4.3 Price level adjustment and the Fisher debt effect......Page 59 4.4 Stability analysis with fixed nominal wages......Page 70 4.5 Stability analysis with flexible nominal wages......Page 71 4.6 Conclusion......Page 79 Appendix 1......Page 80 Appendix 2......Page 82 5.1 Introduction......Page 86 5.2 A brief retrospective on aggregate supply in The General Theory......Page 87 5.3 Time and the production process: a simple model......Page 88 5.4 A full macro model......Page 90 5.5 The model with exogenous price expectations......Page 91 5.6 The model with endogenous price expectations......Page 93 5.7 Conclusion......Page 98 Appendix......Page 99 6.1 Introduction......Page 102 6.2 Representations of uncertainty......Page 103 6.3 Constructivism and economists' constructions of decision making in the presence of uncertainty......Page 105 6.4 Expectations and the rational expectations revolution......Page 107 6.5 Knowledge, constructivism, and expectations: a theory of reflexive rational expectations......Page 111 6.6 Conclusion......Page 116 7.1 Introduction......Page 118 7.2 Three competing models of the money supply......Page 119 7.3 Evaluating the competing models: some empirical evidence......Page 132 7.4 Conclusion......Page 135 Appendix 2......Page 136 Appendix 3......Page 137 8.1 Introduction......Page 141 8.2 Endogenous money: a recapitulation......Page 142 8.3 Endogenous finance......Page 143 8.4 Empirical evidence on endogenous finance......Page 150 Appendix......Page 156 9.2 A Post Keynesian short period model......Page 159 9.3 Model specification issues......Page 165 9.4 Comparative static analysis......Page 171 9.5 Conclusion......Page 178 10.1 Introduction......Page 181 10.2 Unemployment and the problem of sectoral demand shocks: a static model......Page 182 10.3 Nominal demand growth with sectoral demand shifts: foundations of the Phillips relation......Page 185 10.4 Further issues: inflation expectations and supply side shocks......Page 191 10.5 Conclusion......Page 195 11.1 Introduction......Page 197 11.2 A macro model......Page 198 11.3 Conflict and the dynamics of inflation......Page 200 11.4 The conflict model with endogenous targets......Page 206 11.5 The monetary sector reconsidered......Page 212 11.6 Conclusion......Page 214 12.1 Introduction......Page 216 12.2 Debt and the business cycle: three simple models......Page 218 12.3 Conclusion......Page 228 13 Competing Visions: A Post Keynesian Summing Up......Page 231 References......Page 237 Name Index......Page 247 Subject Index......Page 249 This book provides a novel statement of Post Keynesian macroeconomic theory that synthesizes three strains of such theory associated with Yale (Tobin) Keynesianism, Cambridge, UK (Kaldor) Keynesianism, and American (Davidson, Minsky) Post Keynesianism. The book focuses on the significance of privately created inside debt and income distribution for the determination of economic activity. The existence of inside debt means that "nominal" wage reductions cause redistributions of wealth that can reduce aggregate demand, while the effect of income distribution on aggregate demand means that "real" wage reductions also reduce aggregate demand. Consequently, neither nominal wage flexibility nor real wage flexibility can ensure full employment in a monetary economy. The book then explores how money and inside debt are created by the normal workings of the financial system. Fluctuations in the level of debt service burdens give rise to fluctuations in aggregate demand which can then cause business cycles. Cartomancy, Or Fortune Telling By Cards, Can Trace Its History Back To The European Renaissance. Its Method Has Varied Over Time, But Its Practice Remains In Use To This Day. 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