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Motivated by disputes over the quantity theory of money and the fiscal theory of the price level (the FTPL), I consider price determination in another macro model which can be used both in the short run and in the long run. It is a two-sector model with flexible prices and profit-maximizing firms. Government and the foreign sector are also included. It is assumed that prices are determined by supply and demand in the short run unlike in the quantity theory and the FTPL. In particular the determination of the price of consumption goods is pursued. Finally the FTPL is examined.

The neoclassical synthesis has been defined as a bridge between Keynes-ian theory and Walrasian general equilibrium theory. The aim of this article is to show that founders of the neoclassical synthesis were not homogenous in their appraisal of the importance of Walrasian theory. To do so, we focus on Robert Solow’s contributions as a case study and examine the history of his lifelong criticism of what he called “axiomatics.” According to Solow, the axiomatic approach aims at founding economics on one general and complex model based on first principles or axioms. In contrast, Solow advocated the use of a diversity of simple and partial models, which have practical utility, are realistic in their crucial assumptions, consider institutions and the evolving nature of the economy, and rely on common sense microfoundations. We conclude by suggesting that Solow can be characterized as Cournotian.

Leszek Jasiński [2019] attempts, as the title indicates, “a reading after half a century” of Michał Kalecki's thought. We dispute the main claim in the book, i.e. that Kalecki has a firm place in contemporary mainstream economics and was the originator of many ideas generally accepted today. On careful reading, virtually none of the models and theories by Kalecki selected by Jasiński for appraisal has entered mainstream neoclassical economic research and graduate academic teaching. Most of his policy advice was also neglected by the Capitalist State, (post)Stalinist “socialist” State, and “Intermediate Regimes” in developing countries. His opus remains original, advanced, insightful but heterodox in all contexts. Our main thesis is that, toutes proportions gardées, Jasiński is signalling an attempt to repeat the absorption of ‘bastardised’ Keynesianism into the mainstream “grand neoclassical synthesis” in the 1940s/50s with selected, reinterpreted, ‘bastardised’ Kaleckian ideas today. We also doubt that the unilinear view of the history of economic thought can be sustained.

Keynesian economics is not dead. Instead, it is in a similar condition to Sleeping Beauty after she pricked her finger on the spindle. A large hedge of thorns has been laid over the original Keynesian building so that it is hardly recognizable today. Keynesian economics has suffered from a failure to sufficiently identify the core of the Keynesian revolution. This paper argues that the core concerns the distinction between real and monetary exchange economies, and that a proper understanding of money's role requires identifying the mechanisms of the financial system. Doing so reveals the fundamental incompatibility between real and monetary analysis.

Some seriously misunderstood issues arise in three paragraphs in the last chapter of Keynes’s General Theory concerning the relationship between his theory and orthodox theory. That these passages ...

We research the undeniable unity and overcome the asymmetry of such concepts as a financial system and financial and credit system based on the two main instruments – finance and credit. The article substantiates the statement that the monetary mechanism together with the mechanism of taxation and public expenditure, the mechanism of lending, savings and investment determine the main components of the financial and credit system and provide financial activity of society. The main attention is paid to the study of theoretical and methodological fundamentals of the financial and credit system, which form two powerful scientific constructions – Keynesianism and monetarism. They differ between themselves not so in fact, as the means of state influence on the formation of financial and credit system. In particular, the theory of J. M. Keynes contends that monetary and fiscal instruments with a predominance of fiscal policy are the most effective mechanisms of state regulation of the economy. First of all, these are direct government spending on stimulation of effective demand, as well as the withdrawal of public savings through a system of taxes and loans. The position of the monetarists is that the monetary sphere and the position of money are the main subjects of government regulation, according to which, inflation is a monetary phenomenon, and its main reason is the forced issue of money. Because of this, monetary instruments are considered to be the main ones in their impact on the national economy.So, each of these theories – Keynesianism or monetarism – can't prove their advantage in the formation of the financial and credit system and forms of government influence on the national economy. The theory of "great neoclassical synthesis", which generalized theoretical and practical achievements of various scientific concepts and eliminated the confrontation between Keynesianism and monetarism, allows to solve discussion questions between Keynesianism or monetarism. As a result, the asymmetry in the understanding of such concepts as “financial and credit system” and “financial system” is overcome. This is confirmed by various models of financial systems of theUSA,Japanand European countries, as well asUkraine.

The market mechanism, or the price adjustment mechanism, and the state of mind have been considered important factors in economic activities, but how these two are related has not been explored. The former is called the Walrasian mechanism and is the basic framework of microeconomics, in which psychological factors are put behind the scenes or considered restrictions to rational decision-making by agents. The latter is argued as a main factor in a trade cycle in macroeconomics. Because microeconomics and macroeconomics have not been integrated into a fully synthesized theory, the distribution of states of mind has not been regarded as a factor in price adjustment in a market economy or as a market failure. We consider what kind of state of mind an agent can have based on past market trading and which factors bind his trading opportunity. This paper presents a model of Samuelsonian neoclassical synthesis, in which either the Walrasian mechanism or a non-Walrasian quantity-constrained mechanism works depending on the distribution of states of mind. We claim that in many cases, a non-Walrasian mechanism is at work and with some policies, the Walrasian mechanism would be restored.

With the intensification of processes caused by globalization, the relevance of the studies about the impact of exogenous shocks in the global markets for wealth and money on the macroeconomic parameters of a small open economy is growing. Moreover, the basis of modern economic relations within the global economy is not only the global trade in goods and services, but the international movement of production factors. Migration of labor resources starts playing an increasingly important role in the sphere of the international movement of production factors. The study of these processes and their further analysis is possible within the framework of the IS-LM-BP model supplemented by the labor market data. The IS-LM-BP model is still a significant theoretical and methodological development, which allows us to analyze the impact of exogenous shocks on the global and domestic markets of goods and money markets on a small open economy, as well as evaluate the effectiveness of state regulation. The opportunity to assess the impact of the exchange rate regime and the mobility of international capital on the effectiveness of state regulation in a small open economy, as well as on the mechanism for adjusting disturbed double equilibrium under the influence of exogenous shocks is considered to be the most interesting. However, the most important macroeconomic market – the labor market – remains outside the framework of this model. The purpose of the study is to modify the IS-LM-BP model developed in the framework of the concept of J.M. Keynes including a new curve – the full-employment curve in the model. The derivation of the curve is based on the theoretical premises of the neoclassical concept: full employment directly depends on the real interest rate in this model acts as an endogenous parameter. This study is based on Keynesian principles of double equilibrium in a small open economy supplemented by neoclassical ideas about full employment as an endogenous parameter. The modification of the IS-LM-BP model based on the principles of neoclassical synthesis means the development of a full-employment curve and including it in the case study model based on the basic principles of the theoretical justification of this macroeconomic model. The full-employment curve identifies the equilibrium curve in the neoclassical labor market. The reason for its inclusion in the IS-LM-BP model is the existing theoretically substantiated relationship between the real interest rate and the supply on the labor market as part of the concept of a new classical school. The dependence is based on the inter-temporal price of labor, which, in turn, is directly dependent on the real interest rate. Since the derivation of the full-employment curve is based on the neoclassical postulates of the functioning of the labor market, the suggested modification of the IS-LM-BP model can be considered as an example of neoclassical synthesis. The IS-LM-BP model modified by the author is proposed as a methodological base for the study of such theoretical and practical aspects of the functioning of open business systems as: 1) the analysis of the adjustment mechanism in the process of restoring disequilibrium in the labor market, goods, money and foreign exchange as a result of exposure to exogenous shocks; 2) the analysis of the effectiveness of state regulation in the functioning of the labor market, goods, money and foreign currency; 3) the comparison of the desired theoretical model with the real processes inherent in small open economies. 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