T Palley
Biographic Data
| ID | 284449 |
|---|---|
| NAME | T Palley |
| GIVEN NAMES | T |
| FAMILY NAME | Palley |
| SIGNATURE | PALLEY T |
| AFFILIATIONS | Open Society Foundations |
| ORCID | 0000-0002-0319-3157 |
| VERIFIED | Yes |
| TOTAL WORKS | 29 |
| TOTAL CITATIONS | 89 |
| AUTHOR COUNT | 29 |
| EDITOR COUNT | 0 |
| FIRST PUBLICATION YEAR | 1996 |
| LATEST PUBLICATION YEAR | 2025 |
| H-INDEX | 7 |
The War in Ukraine—A History: How the U.S. Exploited Fractures in the Post-Soviet Order
Thomas Palley identifies and illuminates both the internal and external drivers of the war in Ukraine. Through this article, he explores Ukraine's how the breakup of the Soviet Union, the aggressive expansion of NATO, U.S. neoconservative geopolitics, present-day domestic tensions, and other factors led to the current conflict, in which the only winner seems to be the United States
Keynes’ denial of conflict: A reply to Professor Heise’s critique
This note responds to Arne Heise's critque of my article on Keynes's denial of conflict in The General Theory. Heise's response fails to show Keynes addressed conflict and makes several meritless criticisms regarding my treatment of Keynes and Keynesianism. It also fails to recognize the purpose of my article which was to show conflict is an essential part of capitalism; conflict is absent in Keynes' magnum opus; conflict is absent in Neo- and Ne…
Keynes’ denial of conflict: Why The General Theory is a misleading guide to capitalism and stagnation
The Macroeconomics of Government Spending: Distinguishing Between Government Purchases, Government Production, and Job Guarantee Programs
This paper reconstructs the Keynesian income—expenditure (IE) model to include distinctions between government purchases of private sector output, government production, and government job guarantee program (JGP) employment. Analytically, including those distinctions transforms the model from a single sector model into a multi-sector model. It also surfaces the logic behind the automatic stabilizer property of JGP employment. The model is then ex…
National policy space: Reframing the political economy of globalization and its implications for national sovereignty and democracy
This paper critiques the trilemma framing of the political economy of globalization, and offers an alternative framing based on the construction of national policy space. The paper makes three main contributions. First, building on Stein (2016), it deconstructs the categories used by Rodrik (2011) and introduces distinctions between the “degree”, “type”, and “dimensions” of globalization; “effective” versus “formal” national sovereignty; “content…
Unemployment and Growth: Putting Unemployment into Post Keynesian Growth Theory
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 growth. Consequently, the models can have an imploding or exploding unemployment rate. The underlying analytical problem is failure to resolve the Harrod (1939)–Solow (1956) knife-edge problem. This paper shows how that knife-edge problem can be resolved via a Kal…
The theory of endogenous money and the LM schedule: Prelude to a reconstruction of ISLM
Money is at the center of macroeconomics, which makes understanding the money supply central for macroeconomic theory. This paper presents the Post Keynesian theory of endogenous money supply and shows how it is fundamentally different from the conventional money supply theory. The conventional approach relies on the money multiplier and bank lending is invisible. Post Keynesian theory discards the money multiplier and focuses on bank lending whi…
The Critics of Modern Money Theory (MMT) are Right
Eric Tymoigne and Randall Wray's (2014) defense of MMT leaves the MMT emperor even more naked than before (excuse the Yogi Berra-ism). The criticism of MMT is not that it has produced nothing new. The criticism is that MMT is a mix of old and new, the old is correct and well understood, while the new is substantially wrong. Among many failings, T&W fail to provide an explanation of how MMT generates full employment with price stability; lack a cr…
Money, Fiscal Policy, and Interest Rates: A Critique of Modern Monetary Theory
This paper examines modern monetary theory (MMT). MMT is a restatement of established Keynesian monetary macroeconomics and so there is nothing new warranting a separate nomenclature. MMT over-simplifies the challenges of attaining non-inflationary full employment by ignoring dilemmas posed by the Phillips curve, maintaining real and financial sector stability, and an open economy. Its policy recommendations take little account of political econo…
Keynesian, Classical and New Keynesian Approaches to Fiscal Policy: Comparison and Critique
The short-run macroeconomic effectiveness of fiscal policy depends primarily on the effect of policy on aggregate demand (AD) and the effect of AD on output. This paper examines how macroeconomic perspectives (Keynesian, Post Keynesian, monetarist, classical, new classical, and new Keynesian) describe the effect of AD on output, thereby making or denying space for fiscal policy to impact output. The neo-Ricardian hypothesis (NRH) concerns the eff…
Europe's Crisis without End: The Consequences of Neoliberalism
This paper argues that the eurozone crisis is the product of a toxic neoliberal economic policy cocktail. The mixing of that cocktail traces all the way back to the early 1980s when Europe embraced the neoliberal economic model that undermined the income- and demand-generation process via wage stagnation and widened income inequality. Stagnation was serially postponed by a number of developments, including the stimulus from German re-unification …
The Limits of Minsky's Financial Instability Hypothesis as an Explanation of the Crisis
Aside from Keynes, no economist seems to have benefitted so much from the financial crisis of 2007-08 as the late Hyman Minsky. The collapse of the sub-prime market in August 2007 has been widely labeled a "Minsky moment," and many view the subsequent implosion of the financial system and deep recession as confirming Minsky's "financial instability hypothesis" regarding economic crisis in capitalist economies....Recognition of Minsky's intellectu…
The Relative Permanent Income Theory of Consumption: A Synthetic Keynes–Duesenberry–Friedman Model
This paper presents a theory of consumption that synthesizes the seminal contributions of Keynes (1936), Duesenberry (1948), and Friedman (1957). The model is labeled the ‘relative permanent income’ theory of consumption. The key feature is that the share of permanent income devoted to consumption is a negative function of household relative permanent income. The model generates patterns of consumption spending consistent with both long-run time …
Rethinking the economics of capital mobility and capital controls
This paper reexamines the issue of international financial capital mobility, which is today's economic orthodoxy. Discussion is often framed in terms of the impossible trinity. That framing distorts discussion by representing capital mobility as having equal significance with sovereign monetary policy and control over exchange rates. It also distorts discussion by ignoring possibilities for coordinated monetary policy and exchange rates, and for …
The Economics of Outsourcing: How Should Policy Respond
Outsourcing is a central element of economic globalization, representing a new form of competition. Responding to outsourcing calls for policies that enhance national competitiveness and establish rules ensuring acceptable forms of competition. Viewing outsourcing through the lens of competition connects with early 20th-century American institutional economics. The policy challenge is to construct institutions that ensure stable, robust flows of …
Asset-based Reserve Requirements: A Response
The Fallacy of the Revised Bretton Woods Hypothesis: Why Today's Global Financial System Is Unsustainable and Suggestions for a Replacement
In a series of papers, Dooley, Folkerts-Landau, and Garber (2003, 2004a, 2004b) have suggested that today's international financial system has structural similarities with the Bretton Woods arrangement that held sway between 1 946 and 1 97 1 . Export-led growth by developing countries figures heavily in their analysis, and the authors have done a major service by reminding the economics profession of export-led growth and the possibility that it …
Japan, Financial Stability and the World Economy: Two Perspectives
New York. Over the past several years, much attention has focused on the role of China's trade surplus in creating today's global financial imbalances. But too little attention has been paid to the role of Japan's policy of near-zero interest rates in contributing to these imbalances. As global financial uncertainty rises, it is time for Japan to change course
External Contradictions of the Chinese Development Model: Export-led growth and the dangers of global economic contraction
China's development model faces an external constraint that could cause an economic hard landing. China has become a global manufacturing powerhouse, and its size now renders its export-led growth strategy unsustainable. China relies on the US market, but the scale of its exports is contributing to the massive US trade deficit, creating financial fragility and undermining the US manufacturing sector. These developments could stall the US economy'…
Asset‐based reserve requirements: Reasserting domestic monetary control in an era of financial innovation and instability
This paper argues for developing a new system of financial regulation based upon asset‐based reserve requirements (ABRRs). Such a system represents a shift in regulatory focus away from the traditional concern with the liability side of financial intermediaries' balance sheets. ABRRs have both significant macroeconomic and microeconomic advantages. At the macroeconomic level, they can provide policy makers with additional policy instruments. This…
Escaping the debt constraint on growth: A suggested monetary policy for Brazil
Existing interest rates imply explosive debt dynamics for Brazil. It also faces rising inflation from earlier currency depreciations, which could trigger future depreciation. These conditions impose a policy contradiction. Brazil needs lower interest rates for debt sustainability, but tight monetary policy to avoid exchange rate depreciation and inflation. The paper develops a strategy to escape this contradiction. Policy must bolster investor co…
Global Social Policy Forum and Policy Brief
Pitfalls in the Theory of Growth: An application to the balance of payments constrained growth model
El presente trabajo constituye una investigación a través de la cual se determina el papel del sector externo en el crecimiento económico colombiano, a partir de la relación comercial que existe entre Colombia y China, desde 1986 hasta 2015. Los resultados del estudio demuestran que la participación de las exportaciones e importaciones con China, segundo socio comercial de Colombia, ha provocado un porcentaje alto de déficit en la balanza comerci…
Sovereign Debt Restructuring Proposals: A Comparative Look
A range of different solutions, as the contributions to this roundtable show, has been proposed regarding the problem of sovereign borrower insolvency. Two prominent factors need to be taken into account in assessing the merits of each proposal: its impact on economic efficiency, in particular on the supply and price of credit for developing countries, and its regard for considerations of justice and procedural fairness
The Economics of Exchange Rates and the Dollarization Debate: The Case Against Extremes
The 1990s was a decade of global boom and bust, and exchange rates emerged as a key economic variable. In the early part of the decade, developing countries were encouraged to adopt fixed exchange rates that were seen as providing a nominal anchor to the domestic price level that could enforce monetary policy discipline and ensure low inflation. With most economists maintaining that the equilibrium level of economic activity is neutral with regar…
Money, Fiscal Policy, and Interest Rates: A Critique of Modern Monetary Theory
This paper examines modern monetary theory (MMT). MMT is a restatement of established Keynesian monetary macroeconomics and so there is nothing new warranting a separate nomenclature. MMT over-simplifies the challenges of attaining non-inflationary full employment by ignoring dilemmas posed by the Phillips curve, maintaining real and financial sector stability, and an open economy. Its policy recommendations take little account of political econo…
The Critics of Modern Money Theory (MMT) are Right
Eric Tymoigne and Randall Wray's (2014) defense of MMT leaves the MMT emperor even more naked than before (excuse the Yogi Berra-ism). The criticism of MMT is not that it has produced nothing new. The criticism is that MMT is a mix of old and new, the old is correct and well understood, while the new is substantially wrong. Among many failings, T&W fail to provide an explanation of how MMT generates full employment with price stability; lack a cr…
The Relative Permanent Income Theory of Consumption: A Synthetic Keynes–Duesenberry–Friedman Model
This paper presents a theory of consumption that synthesizes the seminal contributions of Keynes (1936), Duesenberry (1948), and Friedman (1957). The model is labeled the ‘relative permanent income’ theory of consumption. The key feature is that the share of permanent income devoted to consumption is a negative function of household relative permanent income. The model generates patterns of consumption spending consistent with both long-run time …
Rethinking the economics of capital mobility and capital controls
This paper reexamines the issue of international financial capital mobility, which is today's economic orthodoxy. Discussion is often framed in terms of the impossible trinity. That framing distorts discussion by representing capital mobility as having equal significance with sovereign monetary policy and control over exchange rates. It also distorts discussion by ignoring possibilities for coordinated monetary policy and exchange rates, and for …
The theory of endogenous money and the LM schedule: Prelude to a reconstruction of ISLM
Money is at the center of macroeconomics, which makes understanding the money supply central for macroeconomic theory. This paper presents the Post Keynesian theory of endogenous money supply and shows how it is fundamentally different from the conventional money supply theory. The conventional approach relies on the money multiplier and bank lending is invisible. Post Keynesian theory discards the money multiplier and focuses on bank lending whi…
Keynesian, Classical and New Keynesian Approaches to Fiscal Policy: Comparison and Critique
The short-run macroeconomic effectiveness of fiscal policy depends primarily on the effect of policy on aggregate demand (AD) and the effect of AD on output. This paper examines how macroeconomic perspectives (Keynesian, Post Keynesian, monetarist, classical, new classical, and new Keynesian) describe the effect of AD on output, thereby making or denying space for fiscal policy to impact output. The neo-Ricardian hypothesis (NRH) concerns the eff…
Europe's Crisis without End: The Consequences of Neoliberalism
This paper argues that the eurozone crisis is the product of a toxic neoliberal economic policy cocktail. The mixing of that cocktail traces all the way back to the early 1980s when Europe embraced the neoliberal economic model that undermined the income- and demand-generation process via wage stagnation and widened income inequality. Stagnation was serially postponed by a number of developments, including the stimulus from German re-unification …
The Limits of Minsky's Financial Instability Hypothesis as an Explanation of the Crisis
Aside from Keynes, no economist seems to have benefitted so much from the financial crisis of 2007-08 as the late Hyman Minsky. The collapse of the sub-prime market in August 2007 has been widely labeled a "Minsky moment," and many view the subsequent implosion of the financial system and deep recession as confirming Minsky's "financial instability hypothesis" regarding economic crisis in capitalist economies....Recognition of Minsky's intellectu…
Keynes’ denial of conflict: Why The General Theory is a misleading guide to capitalism and stagnation
The Fallacy of the Revised Bretton Woods Hypothesis: Why Today's Global Financial System Is Unsustainable and Suggestions for a Replacement
In a series of papers, Dooley, Folkerts-Landau, and Garber (2003, 2004a, 2004b) have suggested that today's international financial system has structural similarities with the Bretton Woods arrangement that held sway between 1 946 and 1 97 1 . Export-led growth by developing countries figures heavily in their analysis, and the authors have done a major service by reminding the economics profession of export-led growth and the possibility that it …
External Contradictions of the Chinese Development Model: Export-led growth and the dangers of global economic contraction
China's development model faces an external constraint that could cause an economic hard landing. China has become a global manufacturing powerhouse, and its size now renders its export-led growth strategy unsustainable. China relies on the US market, but the scale of its exports is contributing to the massive US trade deficit, creating financial fragility and undermining the US manufacturing sector. These developments could stall the US economy'…
Pitfalls in the Theory of Growth: An application to the balance of payments constrained growth model
El presente trabajo constituye una investigación a través de la cual se determina el papel del sector externo en el crecimiento económico colombiano, a partir de la relación comercial que existe entre Colombia y China, desde 1986 hasta 2015. Los resultados del estudio demuestran que la participación de las exportaciones e importaciones con China, segundo socio comercial de Colombia, ha provocado un porcentaje alto de déficit en la balanza comerci…
Global Social Policy Forum and Policy Brief
The Macroeconomics of Government Spending: Distinguishing Between Government Purchases, Government Production, and Job Guarantee Programs
This paper reconstructs the Keynesian income—expenditure (IE) model to include distinctions between government purchases of private sector output, government production, and government job guarantee program (JGP) employment. Analytically, including those distinctions transforms the model from a single sector model into a multi-sector model. It also surfaces the logic behind the automatic stabilizer property of JGP employment. The model is then ex…
The Economics of Outsourcing: How Should Policy Respond
Outsourcing is a central element of economic globalization, representing a new form of competition. Responding to outsourcing calls for policies that enhance national competitiveness and establish rules ensuring acceptable forms of competition. Viewing outsourcing through the lens of competition connects with early 20th-century American institutional economics. The policy challenge is to construct institutions that ensure stable, robust flows of …
Sovereign Debt Restructuring Proposals: A Comparative Look
A range of different solutions, as the contributions to this roundtable show, has been proposed regarding the problem of sovereign borrower insolvency. Two prominent factors need to be taken into account in assessing the merits of each proposal: its impact on economic efficiency, in particular on the supply and price of credit for developing countries, and its regard for considerations of justice and procedural fairness
The Economics of Exchange Rates and the Dollarization Debate: The Case Against Extremes
The 1990s was a decade of global boom and bust, and exchange rates emerged as a key economic variable. In the early part of the decade, developing countries were encouraged to adopt fixed exchange rates that were seen as providing a nominal anchor to the domestic price level that could enforce monetary policy discipline and ensure low inflation. With most economists maintaining that the equilibrium level of economic activity is neutral with regar…
Plenty of Nothing: The Downsizing of the American Dream and the Case for Structural Keynesianism
Journal Article Plenty of Nothing: The Downsizing of the American Dream and the Case for Structural Keynesianism. By Thomas I. Palley. Princeton: Princeton University Press, 1998 and Contingent Work: American Employment Relations in Transition. Ed. by Kathleen Barker and Kathleen Christensen. Ithaca: Cornell University Press, 1998 Get access Judith Stein Judith Stein City College of New York, New York, New York Search for other works by this auth…
Aggregate Demand in a Reconstruction of Growth Theory: The macro foundations of economic growth
Keynes's General Theory introduced the concept of demand determined equilibrium. Although traditionally interpreted as only relevant for short-period analysis, it has important implications for growth theory. Harrodian growth theory recognized this significance, but neo-classical reinterpretations of Harrod suppressed this influence. Reconstructing a Keynesian theory of growth requires restoring aggregate demand within the growth process. However…
Aggregate Demand in a Reconstruction of Growth Theory: The macro foundations of economic growth
Keynes's General Theory introduced the concept of demand determined equilibrium. Although traditionally interpreted as only relevant for short-period analysis, it has important implications for growth theory. Harrodian growth theory recognized this significance, but neo-classical reinterpretations of Harrod suppressed this influence. Reconstructing a Keynesian theory of growth requires restoring aggregate demand within the growth process. However…
Macroeconomics with Conflict and Income Distribution
This paper presents a Post Keynesian model explaining the determination of employment and income distribution. A major innovation is the incorporation of the insider-outsider description of labor markets into a macro framework. This introduces power and conflict into the macro process. Microeconomic bargaining considerations are central to macroeconomic outcomes. Endogenous government deflicits can sustain profitability in an otherwise contractio…
Plenty of Nothing: The Downsizing of the American Dream and the Case for Structural Keynesianism
Plenty of Nothing: The Downsizing of the American Dream and the Case for Structural Keynesianism
Journal Article Plenty of Nothing: The Downsizing of the American Dream and the Case for Structural Keynesianism. By Thomas I. Palley. Princeton: Princeton University Press, 1998 and Contingent Work: American Employment Relations in Transition. Ed. by Kathleen Barker and Kathleen Christensen. Ithaca: Cornell University Press, 1998 Get access Judith Stein Judith Stein City College of New York, New York, New York Search for other works by this auth…
Global Social Policy Forum and Policy Brief
Pitfalls in the Theory of Growth: An application to the balance of payments constrained growth model
El presente trabajo constituye una investigación a través de la cual se determina el papel del sector externo en el crecimiento económico colombiano, a partir de la relación comercial que existe entre Colombia y China, desde 1986 hasta 2015. Los resultados del estudio demuestran que la participación de las exportaciones e importaciones con China, segundo socio comercial de Colombia, ha provocado un porcentaje alto de déficit en la balanza comerci…
Sovereign Debt Restructuring Proposals: A Comparative Look
A range of different solutions, as the contributions to this roundtable show, has been proposed regarding the problem of sovereign borrower insolvency. Two prominent factors need to be taken into account in assessing the merits of each proposal: its impact on economic efficiency, in particular on the supply and price of credit for developing countries, and its regard for considerations of justice and procedural fairness
The Economics of Exchange Rates and the Dollarization Debate: The Case Against Extremes
The 1990s was a decade of global boom and bust, and exchange rates emerged as a key economic variable. In the early part of the decade, developing countries were encouraged to adopt fixed exchange rates that were seen as providing a nominal anchor to the domestic price level that could enforce monetary policy discipline and ensure low inflation. With most economists maintaining that the equilibrium level of economic activity is neutral with regar…
Asset‐based reserve requirements: Reasserting domestic monetary control in an era of financial innovation and instability
This paper argues for developing a new system of financial regulation based upon asset‐based reserve requirements (ABRRs). Such a system represents a shift in regulatory focus away from the traditional concern with the liability side of financial intermediaries' balance sheets. ABRRs have both significant macroeconomic and microeconomic advantages. At the macroeconomic level, they can provide policy makers with additional policy instruments. This…
Escaping the debt constraint on growth: A suggested monetary policy for Brazil
Existing interest rates imply explosive debt dynamics for Brazil. It also faces rising inflation from earlier currency depreciations, which could trigger future depreciation. These conditions impose a policy contradiction. Brazil needs lower interest rates for debt sustainability, but tight monetary policy to avoid exchange rate depreciation and inflation. The paper develops a strategy to escape this contradiction. Policy must bolster investor co…
External Contradictions of the Chinese Development Model: Export-led growth and the dangers of global economic contraction
China's development model faces an external constraint that could cause an economic hard landing. China has become a global manufacturing powerhouse, and its size now renders its export-led growth strategy unsustainable. China relies on the US market, but the scale of its exports is contributing to the massive US trade deficit, creating financial fragility and undermining the US manufacturing sector. These developments could stall the US economy'…
Asset-based Reserve Requirements: A Response
The Fallacy of the Revised Bretton Woods Hypothesis: Why Today's Global Financial System Is Unsustainable and Suggestions for a Replacement
In a series of papers, Dooley, Folkerts-Landau, and Garber (2003, 2004a, 2004b) have suggested that today's international financial system has structural similarities with the Bretton Woods arrangement that held sway between 1 946 and 1 97 1 . Export-led growth by developing countries figures heavily in their analysis, and the authors have done a major service by reminding the economics profession of export-led growth and the possibility that it …
Japan, Financial Stability and the World Economy: Two Perspectives
New York. Over the past several years, much attention has focused on the role of China's trade surplus in creating today's global financial imbalances. But too little attention has been paid to the role of Japan's policy of near-zero interest rates in contributing to these imbalances. As global financial uncertainty rises, it is time for Japan to change course
The Economics of Outsourcing: How Should Policy Respond
Outsourcing is a central element of economic globalization, representing a new form of competition. Responding to outsourcing calls for policies that enhance national competitiveness and establish rules ensuring acceptable forms of competition. Viewing outsourcing through the lens of competition connects with early 20th-century American institutional economics. The policy challenge is to construct institutions that ensure stable, robust flows of …
The Relative Permanent Income Theory of Consumption: A Synthetic Keynes–Duesenberry–Friedman Model
This paper presents a theory of consumption that synthesizes the seminal contributions of Keynes (1936), Duesenberry (1948), and Friedman (1957). The model is labeled the ‘relative permanent income’ theory of consumption. The key feature is that the share of permanent income devoted to consumption is a negative function of household relative permanent income. The model generates patterns of consumption spending consistent with both long-run time …
Rethinking the economics of capital mobility and capital controls
This paper reexamines the issue of international financial capital mobility, which is today's economic orthodoxy. Discussion is often framed in terms of the impossible trinity. That framing distorts discussion by representing capital mobility as having equal significance with sovereign monetary policy and control over exchange rates. It also distorts discussion by ignoring possibilities for coordinated monetary policy and exchange rates, and for …
The Limits of Minsky's Financial Instability Hypothesis as an Explanation of the Crisis
Aside from Keynes, no economist seems to have benefitted so much from the financial crisis of 2007-08 as the late Hyman Minsky. The collapse of the sub-prime market in August 2007 has been widely labeled a "Minsky moment," and many view the subsequent implosion of the financial system and deep recession as confirming Minsky's "financial instability hypothesis" regarding economic crisis in capitalist economies....Recognition of Minsky's intellectu…
Keynesian, Classical and New Keynesian Approaches to Fiscal Policy: Comparison and Critique
The short-run macroeconomic effectiveness of fiscal policy depends primarily on the effect of policy on aggregate demand (AD) and the effect of AD on output. This paper examines how macroeconomic perspectives (Keynesian, Post Keynesian, monetarist, classical, new classical, and new Keynesian) describe the effect of AD on output, thereby making or denying space for fiscal policy to impact output. The neo-Ricardian hypothesis (NRH) concerns the eff…
Europe's Crisis without End: The Consequences of Neoliberalism
This paper argues that the eurozone crisis is the product of a toxic neoliberal economic policy cocktail. The mixing of that cocktail traces all the way back to the early 1980s when Europe embraced the neoliberal economic model that undermined the income- and demand-generation process via wage stagnation and widened income inequality. Stagnation was serially postponed by a number of developments, including the stimulus from German re-unification …
The Critics of Modern Money Theory (MMT) are Right
Eric Tymoigne and Randall Wray's (2014) defense of MMT leaves the MMT emperor even more naked than before (excuse the Yogi Berra-ism). The criticism of MMT is not that it has produced nothing new. The criticism is that MMT is a mix of old and new, the old is correct and well understood, while the new is substantially wrong. Among many failings, T&W fail to provide an explanation of how MMT generates full employment with price stability; lack a cr…
Money, Fiscal Policy, and Interest Rates: A Critique of Modern Monetary Theory
This paper examines modern monetary theory (MMT). MMT is a restatement of established Keynesian monetary macroeconomics and so there is nothing new warranting a separate nomenclature. MMT over-simplifies the challenges of attaining non-inflationary full employment by ignoring dilemmas posed by the Phillips curve, maintaining real and financial sector stability, and an open economy. Its policy recommendations take little account of political econo…
The theory of endogenous money and the LM schedule: Prelude to a reconstruction of ISLM
Money is at the center of macroeconomics, which makes understanding the money supply central for macroeconomic theory. This paper presents the Post Keynesian theory of endogenous money supply and shows how it is fundamentally different from the conventional money supply theory. The conventional approach relies on the money multiplier and bank lending is invisible. Post Keynesian theory discards the money multiplier and focuses on bank lending whi…
Unemployment and Growth: Putting Unemployment into Post Keynesian Growth Theory
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 growth. Consequently, the models can have an imploding or exploding unemployment rate. The underlying analytical problem is failure to resolve the Harrod (1939)–Solow (1956) knife-edge problem. This paper shows how that knife-edge problem can be resolved via a Kal…
National policy space: Reframing the political economy of globalization and its implications for national sovereignty and democracy
This paper critiques the trilemma framing of the political economy of globalization, and offers an alternative framing based on the construction of national policy space. The paper makes three main contributions. First, building on Stein (2016), it deconstructs the categories used by Rodrik (2011) and introduces distinctions between the “degree”, “type”, and “dimensions” of globalization; “effective” versus “formal” national sovereignty; “content…
Economics (26 works) · Economic Theory and Policy (20 works) · Keynesian economics (15 works) · Macroeconomics (13 works) · Global Financial Crisis and Policies (9 works) · Monetary economics (9 works) · Monetary policy (9 works) · Political science (9 works) · Economic theories and models (8 works) · Neoclassical economics (7 works)