This book represents the first of three volumes offering a complete reinterpretation and restructuring of Keynesian macroeconomics and a detailed investigation of the disequilibrium adjustment processes characterizing the financial, the goods and the labour markets and their interaction. It questions in a radical way the evolution of Keynesian macroeconomics after World War II and focuses on the limitations of the traditional Keynesian approach until it fell apart in the early 1970s, as well as the inadequacy of the new consensus in macroeconomics that emerged from the Monetarist critique of Keynesianism.
Professors Chiarella, Flaschel and Semmler investigate basic methodological issues, the pitfalls of the Rational Expectations School, important feedback channels in the tradition of Tobin’s work, and theories of the wage-price spiral and the evidences for them. The book uses primarily partial approaches, the integration of which will be the subject of subsequent volumes. With its focus on Keynesian propagation mechanisms, the research in this book provides a unique alternative to the black-box shock-absorber approaches that dominate modern macroeconomics.
Reconstructing Keynesian Macroeconomics should be of interest to students and researchers who want to look at alternatives to the mainstream macrodynamics that emerged from the Monetarist critique of Keynesianism.
Table of Contents
Part 1: Methodological Issues: Macro-Frequencies and Dimensions 1. Applicable Macro is Continuous-Time Macro 2. Walras’ Law and the Role of Dimensional Analysis in Economics 3. Lucas (1975): Too Ad Hoc? Part 2: Model-Consistent Forecasts, Determinacy and the Rational Expectations School 4. Price Flexibility and Instability: Tobin (1975) Reconsidered 5. Stock Market Driven Multiplier Dynamics: A Reconsideration 6. Inflation and Perfect Foresight: Implications of Nonlinearity 7. Determinacy in the New-Keynesian Sticky Wage/Price Model Part 3: Macroeconomic Adjustment Processes: Theory 8. Disequilibrium Growth Theory with Insider-Outsider Effects 9. The Dominance of Keynesian Regimes in Nonwalrasian Growth 10. Steindlian Models of Growth and Stagnation 11. Investment of Firms in Capital and Productivity Growth 12. A Harrodian Knife-Edge Theorem in the Wage-Price Dynamics Part 4: Macroeconomic Adjustment Processes: Evidence 13. Estimating Interacting Wage-Price Dynamics 14. ES Calibration of Wage & Price Phillips Curves 15. Testing Nonlinear Wage & Price Phillips Curves for the USA 16. The Distributive Cycle with a Nonlinear Wage Phillips Curve Part 5: The Road Ahead: Neoclassical Syntheses and Beyond 17. Keynesian Business Cycle Analysis: Past, Present, Future
Carl Chiarella is currently Professor of Quantitative Finance in the Business Faculty at the University of Technology, Sydney, Australia.
Peter Flaschel is Professor Emeritus of Economics at Bielefeld University, Germany.
Willi Semmler is Professor of Economics at The New School for Social Research, USA.
'Reconstructing Keynesian Macroeconomics lives up to its title. The authors present an up-to-date, technically sophisticated version of truly Keynesian macrodynamics along with a trenchant critique of mainstream modeling. The book represents the state of the art in an exciting area of macroeconomics.' - Lance Taylor, New School for Social Research, New York, USA