This book represents the second 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.
In this second volume the authors present a detailed analysis and comparison of two competing types of approaches to Keynesian macroeconomics, one that integrates goods, labour and financial markets, and another from the perspective of a conventional type of LM-analysis or interest-rate policy of the central bank. The authors employ rigorous dynamic macro-models of a descriptive and applicable nature, which will be of interest to all macroeconomists who use formal model-building in their investigations.
The research in this book with its focus on Keynesian propagation mechanisms provides a unique alternative to the black-box shock-absorber approaches that dominate modern macroeconomics. The main conclusion of the work is that policy makers need to reconsider Keynesian ideas, but in the modern form in which they are expressed in this volume.
Reconstructing Keynesian Macroeconomics will 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. This book will also engage central bankers and macroeconomic policy makers.
Table of Contents
Part I: Competing approaches to Keynesian macroeconomics 1. Representative households or principal-agent capitalism? 2. The two-class Pasinetti model from a neoclassical perspective 3. Expectations and the (un)importance of the real wage feedback channel Part II: Supply dynamics, demand-driven inflation and the distributive cycle 4. Viability and corridor stability in Keynesian supply driven growth 5. Wicksellian inflation pressure in Keynesian models of monetary growth 6. Interacting two-country business fluctuations Part III: The semistructural aggregate demand–aggregate supply model: theory and evidence 7. Distributive cycles, business fluctuations and the wage-led/profit-led debate 8. DAD–DAS: estimated convergence and the emergence of "complex dynamics" 9. International linkages in a Keynesian two-country model Part IV: The structural Keynes–Metzler–Goodwin model 10. Integrating macromodels of employment, price and inventory dynamics 11. Calibration of an unobservable inflation climate 12. A macroeconometric framework for the analysis of monetary policy Part V: Extensions 13. The dynamics of "natural" rates of growth and employment 14. High-order disequilibrium growth dynamics 15. AD–AS disequilibrium dynamics and endogenous growth Part VI: The road ahead: financial markets 16. Stabilizing an unstable economy and the choice of policy measures
Carl Chiarella is Professor of Quantitative Finance at the University of Technology, Sydney, Australia.
Peter Flaschel is Professor of Economics at Bielefeld University, Germany.
Willi Semmler is Professor of Economics at The New School for Social Research, New York, USA.
"These three are nothing short of a triumph. The authors have done what many economists have failed to do: offer a critical analysis of mainstream macro building and offer their own, thought-provoking and original ideas. These three books will appeal to all graduate students and academics alike who are looking for strong technical analysis rooted in a deep understanding of macroeconomic theory." - Louis-Philippe Rochon, Laurentian University, Canada, and International Economic Policy Institute