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We examine two external shocks that trigger inflationary pressures in Argentina. The first corresponds to a shock in international prices of agricultural commodities exported by this country. The s...

This paper celebrates the contributions to Keynesian theory of the late Brazilian economist Fernando Cardim de Carvalho (1953–2018). We use Carvalho’s 12 refereed English-language papers on Keynesi...

This paper assesses the main theoretical contributions by Fernando Cardim de Carvalho to the post-Keynesian Economics Paradigm: his elucidation of the fundamental principles that define the concept...

The aim of the paper is to propose a post-Keynesian analysis of the Porter Hypothesis (PH) according to which regulation policies can bring about new economic opportunities by generating ‘green’ en...

Post Keynesian (PK) growth models typically fail to model unemployment. That shows up in the absence of an equilibrium condition requiring the growth of employment to equal labor-supply gro...

This substantial volume reprints 20 of Marc Lavoie’s essays on post-Keynesian monetary theory and policy originally published between 1984 and 2018. Louis-Philippe Rochon has contributed a ‘Forewor...

This two-volume Oxford Handbook of Post-Keynesian Economics (hereafter, PKH), a most impressive work on many levels, is the outcome of a very significant undertaking on the part of the editors. The...

While modeling macroeconomic interactions, post-Keynesians propose rationales to verbally motivate the choice of behavioral equations. This informal approach to microfoundation results in inconsistencies and fuzzy arguments. The rationales for different behavioral rules are mutually inconsistent, require strong and nontransparent assumptions, or refer to highly endogenous variables that are not part of the model. The postulated behavioral rules are invariant to endogenous changes in the microenvironment, whereas the rationales imply that they adjust endogenously. The prevailing assumption of purely backward-looking expectations is neither theoretically nor empirically satisfying. The article concludes that revisiting the issue of microfoundation within the post-Keynesian framework may be a rewarding line of research. Furthermore, post-Keynesians should be open to various microfoundations as long as models feature the core of post-Keynesian theory—the principle of effective demand.

One of the main collective contributions of the various heterodox schools of monetary thought, such as circuit theory, Post Keynesian theory, modern money theory (MMT) and others, has been to stress the importance of the endogeneity of money via bank credit creation. It is necessary to stress the notion of a collective contribution because of the various claims and counter-claims to academic priority made in the literature. The recent exchange between T.I. Palley and E. Tymoigne and L.R. Wray in this journal provides a clear example of this. This response examines the differences between these writers in some detail.

This book is a considerably expanded revision of Lavoie's 1992 Foundations of Post-Keynesian Economic Analysis. The main text has grown by about 160 pages, to 584 pages, with half of the increase b...

This paper develops a macrodynamic model that takes into account the potentially inflationary consequences of interest rate manipulations through the cost channel of monetary transmission. Evaluations of the macroeconomic implications of the cost channel are common in the mainstream literature. But this literature uses supply-determined macro models and provides standard optimizing microfoundations for the various ways in which the interest rate can affect mark-ups, prices and ultimately the form of the Phillips curve. Our purpose is to study the implications of different Phillips curves, each embodying the cost channel and derived from Post-Keynesian, cost-based-pricing microfoundations, in a monetary-production economy. We focus on the impact of these Phillips curves on macroeconomic stability and the consequent efficacy of stabilization policy. Ultimately, our results suggest that the presence of the cost channel is less significant for stabilization policy than the general orientation of the p...

I met John Pheby in the summer 1986, at an international conference held in Toronto. I was participating in a session on Post Keynesian economics with John Smithin and Ingrid Rima. At the time, I w...

The dominant supply-side foundation for explanations of the growth potential of an economy is losing its persuasive power in the face of persistent losses in output and employment experienced by mature economies in the aftermath of the financial crisis. There is now an opening for eclectic approaches that consider the interaction between supply-side and demand-side factors in shaping macroeconomic outcomes. In this paper, we develop a model that reflects such an approach to interpreting differential productivity growth over the long run, and then present empirical results for several countries. On the supply-side, the model considers the linkage between the intensity and efficacy of the accumulation process and the gains of productivity in terms of a Kaldorian Technical Progress Function. Then, drawing on the Evsey Domar's Keynesian notion of dynamic equilibrium as the growth rate that reconciles additions to capacity with the absorption of aggregate output by demand, we derive a locus for a ‘Domar equili...

Keynes's theory of liquidity preference sought to illuminate the essential properties of money under the conditions of uncertainty that often lead to involuntary unemployment. Subsequent Post-Keynesian literature built upon this concept to show that a deregulated financial system could induce phases of endemic financial instability and crises. Keynes's finance motive provides an important starting point in Post-Keynesian theories of endogenous money. This article examines the controversies between two major contending analytical approaches, the Horizontalist and Structuralist schools.

This paper examines the reasons for the difficulties Post Keynesian economics has had in supplanting mainstream neoclassical theory and for its resulting marginalization. Three explanations are given: intellectual, sociological and political, where the latter two are largely responsible for the current relationship of Post Keynesian economics to the mainstream. The paper also reviews various strategies for improving the future of Post Keynesian economics, including a focus on methodological issues by maintaining an ‘open systems’ approach; a strategy of ‘embattled survival’; the development of a positive alternative to mainstream economics; a strategy of ‘constructive engagement’ with the mainstream; and a dialogue with policymakers. While the global financial crisis has increased the potential for constructive engagement with the mainstream, significant barriers remain to the effectiveness of this approach. The crisis has, however, enhanced the possibility of engaging directly with policymakers and gaini...

After briefly presenting the concepts of orthodox, mainstream and heterodox economics, and applying them to the contemporary period, this article discusses the Post Keynesian school and its relation to contemporary orthodox and mainstream economics. While opposed to the neoclassical orthodoxy, the Post Keynesian school has some positive unifying ideas, although some internal tensions remain. There are also some overlaps between Post Keynesianism and other approaches, and a careful combination of contributions from different approaches and different disciplines is not only possible, but also necessary. Post Keynesianism is located outside current mainstream economics, although this argument partly depends on a more precise specification of the concept of uncertainty. The non-mainstream character of Post Keynesian economics has at least two types of important implications. The first involves the approach's ability to influence the economy and the danger of ‘the scholastic fallacy’; the second refers to a re...

The paper reviews and assesses the negative and positive advice which has been offered by various fellow economists to heterodox economists in general, and Post-Keynesian economists in particular, in light of changes that have occurred within neoclassical economics and in light of the rising hegemony of mainstream economics in economics departments. Various strategies are considered, among which is more engagement with orthodox dissenters, but it is concluded that the majority of heterodox economists ought instead to engage more with other heterodox economists and possibly other social sciences, developing and expanding their own agenda around real-world problems.

This paper considers the question of whether Sraffa had any significant influence on Keynes's thinking in the period of preparation of The General Theory. Questioning the negative view expressed by Pasinetti (2007), we suggest there is a strong possibility that Sraffa, in introducing the idea that there exist as many ‘natural’ rates of interest as there are commodities that can be lent or borrowed, was instrumental in pointing Keynes to a way of escape from the traditional ‘productivity and thrift’ conception of the rate of interest; this new line of thought Keynes developed into the liquidity preference explanation of interest on money.

Post Keynesian and Ecological Economics: Confronting Environmental Issues Richard P.F. Holt, Steven Pressman & Clive L. Spash (Eds) Northampton, MA, Edward Elgar, 2010, 352 pp., $135.00 hardcover I...

This paper combines W.E.G. Salter's analysis of capital-embodied technical change with Kalecki's analysis of financing investment from retained profits to provide a Post Keynesian model of investment with process innovation, which is applied to data from Australian manufacturing industries. The approach to process innovation taken in this study is to identify new capital stock introduced through physical investment, which results in the older vintage stock being decommissioned as technologically obsolete. In the estimated model, the profit factor is used as a measure of the ability to invest, and the rate of labour productivity growth factor reveals the inducement to invest as this rate acts as a proxy for technical change in the Kaleckian investment-ordering model. The two factors combine to explain the accumulation process, both level and variability, and its link to technical change. In conclusion, this paper demonstrates that investment, incorporating technical change, enables industries to become sus...

The paper contributes to the empirical analysis of financial uncertainty and investment from a Post Keynesian perspective. The paper uses the volatility of the exchange rate, the volatility of the stock market index, and the real gold price as indicators for financial uncertainty. An increase in the volatility of a variable is a sufficient, but not a necessary condition for an increase in uncertainty regarding this variable. The effects of changes in uncertainty on investment are investigated econometrically for the United States, the United Kingdom, the Netherlands, Germany and France. Financial uncertainty, we find, has significant negative effects in the US and the Netherlands.

The Structure of Post-Keynesian Economics. The Core Contributions of the Pioneers Geoffrey C. Harcourt Cambridge, Cambridge University Press, 2006, 205 pp., $80.00 hardcover ISBN 13 978-0-521-83387...

This paper uses the Post-Keynesian approach to examine the surge of inflation in Argentina between 1973 and 1976. The pattern of inflation is compared with the changing course of the distributional conflict that characterised the episode. A description of the prevailing political and social context provides insight into Argentina's macroeconomic evolution. Two sub-periods are identified: one from June 1973 to October 1974 characterised mainly by a slowdown in inflation and an upturn in economic growth; a second, ending in the first quarter of 1976, during which the distributional conflict flared up again partly because of the rise in import prices and partly because the firms and workers involved enjoyed substantial market power and bargaining power. This led to an escalation of inflation and great variability in macroeconomic circumstances.

The 1990s, especially in the United States, witnessed an unprecedented change in income distribution, with a large redistribution towards rentiers on the one hand, and towards the upper ranks of the managerial bureaucracy on the other hand, as became ever more obvious after the financial scandals affecting large corporations such as Enron and Worldcom. This has also been accompanied by large capital gains that benefited top-file managers as well as shareholders. Ordinary employees and workers, as a counterpart, have seen their real purchasing power stagnate. Despite all this, and in contrast to the predictions of the canonical Kaleckian growth model, many countries achieved respectable growth rates of capital and output. The purpose of the present paper is to explain this paradox and to provide a consistent post-Keynesian model of growth that would model the main features identified above, making a distinction between managerial labour, basically overhead labour, and workers, essentially direct labour – a...

This paper discusses some of the key contributions of John Kenneth Galbraith to economics and puts them into an historical context. It argues that the work of Galbraith should be recognized as making major contributions to the Post Keynesian paradigm. His work expands on the contributions made by John Maynard Keynes and is consistent with the main ideas of Post Keynesian thought. Much of his work can be thought of as a Post Keynesian microeconomics that needs to be added on to the Post Keynesian macroeconomics begun by Keynes. This work encompasses an understanding of how people behave and how firms behave, a recognition of the importance of uncertainty in the real world, and an emphasis on income effects being more important than substitution effects. The paper then points out how Galbraith has provided a Post Keynesian approach to key macroeconomic issues. The paper concludes with a brief summary of the other articles that make up this special issue to honor John Kenneth Galbraith on the hundredth anniv...

This paper seeks to look at the underlying framework of the New Consensus models, providing a Post-Keynesian critique. In the light of this critique, the model is reformulated, with its basic structure intact, but with alternative post-Keynesian specifications of the Phillips curve being considered. It is shown that such modifications, either allow a long run trade-off between the rate of inflation and the level of output, the rate of capacity utilization and, therefore, unemployment, or, in our preferred specification, changes in output and capacity have no implications for inflation over a large range of capacity utilization.

Taking as its central case urban producer households of a kind widely found in the third world, this paper shows that the through-time analyses of material activities developed by Marxist and Post Keynesian theorists are as applicable to ‘reproductive’ household activities as they are to market-directed production. Drawing on and extending work by Marxist feminist theorists, it develops an internal critique of the productive–reproductive divide by showing that if the material activities of reproduction are taken as seriously as those of for-market production, multiple and complex links between the two spheres become apparent. In this framework insights from different theoretical traditions can be brought into conversation with one another. These points are extended via a critique of the assumption that households are bounded and discrete units. Among other uses, the framework facilitates scrutiny of the assumptions used by advocates for microcredit programs.

Joan Robinson's association with three Cambridge ‘revolutions’—imperfect competition, effective demand and capital theory—is examined in the context of her personal and intellectual partnership with Richard Kahn, John Maynard Keynes and Piero Sraffa. Initially, imperfect competition appeared to have successfully extended marginal analysis to all market forms. It also allowed Richard Kahn and Joan Robinson to persuade Keynes to present the main argument of The General Theory in terms of aggregate demand and aggregate supply. By the early 1950s, however, Joan Robinson had rejected the Marshallian methodology and had become a strenuous censor of neoclassical theory. In this paper the origin of her critique is traced to her reading of Sraffa's Introduction to Ricardo's Principles.

Over the last two decades, work on the Post Keynesian theory of endogenous money has been flourishing, and has prompted a rethinking of the complex nature of money in modern economies. At the heart of the debate between what have now been labelled the accommodationist (or horizontalist) approach and the structuralist approach to endogenous money are the issues of the slope of the supply curves of reserves and of credit money, respectively. Using the distinction between a single period analysis and a continuation analysis, similarities and differences between those approaches are explained, and the suggestion is then made for retaining and re-interpreting them into a more general theory.

Geoffrey Colin Harcourt has devoted a long and fruitful career to the development of themes associated with the Cambridge and Post-Keynesian traditions in economics. He is perhaps best known for his survey of the Cambridge capital theory debates (1972); but he has written widely on growth and investment, on effective demand, on pricing and distribution, and on the history of economics in the twentieth century. He has also written extensively on policy (2001a) and was a 'back room boy' for the Australian Labor Party for many years. During the Vietnam War, Harcourt was a leader of the anti-war movement in South Australia. The following interview focuses on the evolution of, and prospects for, the Cambridge tradition that stems from the work of John Maynard Keynes, Piero Sraffa, Joan Robinson, Richard Kahn, Nicholas Kaldor and Michal Kalecki. The interview took place in Professor Harcourt's rooms in Jesus College, Cambridge, on 5 September 2000.

It is often claimed by American Post Keynesians that the theories of endogenous money originated in the mid-1950s as a result of articles published by Nicholas Kaldor and Hyman Minsky. This paper offers another possibility. It argues that, in the mid-1950s, both Joan Robinson and Richard Kahn offered insights into the workings of a credit economy that have been largely ignored by Post Keynesians and that are consistent with Post Keynesian monetary theory.

We agree with Burczak's identification of the crucial issues. We disagree with his interpretation of them. We expand our defense of the claim that Keynes was a rationalist. We introduce the "horizon principle" to critize Keynes' dichotomy between short-term and long-term expectations. We question the statistical simile guiding some Post Keynesian dsiscussions of uncertainty. We point to the role of evolution in shaping conventions that fit the economic environment in a world with novel events. We think the evidence favors our view over Burczak's. Finally, we put in a plea for framing the issues in a way that facilitates empirical testing.

Austrian and Post-Keynesian economists both continue to make important contributions to subjectivism in economics. Yet, as the ongoing debate between members of the two schools demonstrates, Austrians and Post-Keynesians have very different views about the possibility of intertemporal coordination in a market economy. This paper returns to the debate between Hayek and Keynes in order to respond to a contemporary Austrian critique of Keynes's theory of expectations. The paper shows that the fundamental difference between the two schools ultimately boils down to the nature of conventional expectations and the question of confidence. If the conventional expectation holds to assume the future will look enough like the present to give investors confidence in their decisions, Hayek's arguments about the possibility of intertemporal coordination merit attention. If, however, this convention does not hold, as Keynes thought was sometimes likely, the self-regulating potential of a market economy is called into que...

Oliver Williamson claims that bounded rationality and 'behavioural uncertainty' are principal factors influencing market-based transaction costs. Post Keynesian economists typically distinguish between ergodic and non-ergodic processes with the latter providing a technical definition of 'fundamental uncertainty'. Often, the salience of this fundamental uncertainty has been ignored or conflated with bounded rationality and behavioural uncertainty. Consequently, the richness and distinctness of such concepts is much diminished. This paper shows that while bounded rationality is a key behavioural assumption that may account for the existence of high market-based transaction costs in an ergodic world, and thus for the emergence of firms as distinct modes of economic organisation, it may do so only in the short run. I demonstrate, however, that non-ergodicity can be used to explain the existence of transaction costs and thus firms in the long run.

In a Post Keynesian theoretical framework with sequential financing, two solutions to the problem of the monetary realization of profits are presented. Both of these are consistent with the Kaleckian view, according to which actual profits arise from the present expenditure of their anticipated amount. These two solutions form the basis for a theoretical reconsideration of the relationships among the creation of money, consumption, savings and investment.