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The aim of this paper is to investigate the long run sustainability of a growth path led by multiple non-creating capacity autonomous expenditures in a demand led-supermultiplier model for a small open economy. Using two different models the results show that it is impossible to have in the same model long-term economic growth driven by the non-capacity creating component of domestic demand, exogenous income distribution, long-run balance between productive capacity and aggregate demand and balance of payments equilibrium. Economic viability of the balanced-growth path demands growth to be led by exports, at least for small open economies. [ABSTRACT FROM AUTHOR]

Only twelve years after the global financial crisis, in 2020 the world was again in economic crisis. This time around, the source of the crisis was the COVID-19 global pandemic, which has affected the economy differently than the global financial crisis. However, as they were in 2008–2009, conventional macroeconomic theory and models have once again been found wanting, and economists have again turned for insights to the work of Keynes and more recent post-Keynesian scholars. This paper explores a simulation of the macroeconomic impacts of COVID-19 using the E3ME macro-econometric model. It describes two potential recovery packages, one of which could be described as 'green'. The modelling shows that the green recovery package could support the global economy and national labour markets through the recovery period, outperforming an equivalent conventional stimulus package while simultaneously reducing global CO2 emissions by 12%. A green recovery plan is assessed against a reference scenario with COVID-19. It outperforms a non-green recovery plan of comparable value, while also reducing CO2 emissions by up to 12% below the reference scenario (15% below no-COVID baseline). The policies in the green recovery plan provide different relative impacts. Car scrappage schemes that promote the uptake of electric vehicles have the largest impact on GDP and jobs. Renewables, energy efficiency and electric vehicle promotion all have large impacts on emissions. The green recovery plan boosts production levels in all sectors of the economy except for energy and utilities. It boosts the consumer services sector that has been most affected initially by the pandemic but also the investment sectors that could suffer longer-term damage. [ABSTRACT FROM AUTHOR]

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. [ABSTRACT FROM PUBLISHER]

Boulding's reconstruction of macroeconomics provides a ‘micro-foundation’ based on liquidity preference theory, a balance sheet approach, and a process of homeostasis. These microfoundations are consistent with his aggregate theory and avoid fallacies of composition—such as the paradox of thrift—as well as the ‘adding up’ problems of marginal productivity theory. His distribution theory links income shares to the determinants of employment and output and the conditions of equilibrium of saving and investment. His definitions provide clear alternatives to the NIPA definitions adopted in ‘Keynesian’ theory. He provides an alternative view of fiscal and monetary policies that will not prove to be impotent in the face of the ongoing conservative counterrevolution. Indeed, his theories are quite close to the modern Post-Keynesian understanding of ‘endogenous money,’ the deficit-growth relation, and the investment-saving connection, while his policy recommendations are often consistent with those of Post-Keynesians. [ABSTRACT FROM AUTHOR]