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1
Trautwein, Hans-Michael. "Leijonhufvud on New Keynesian Economics and the economics of Keynes." Oxford Economic Papers 72, no. 4 (May 18, 2020): 923–45. http://dx.doi.org/10.1093/oep/gpaa013.
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Abstract The theme that Axel Leijonhufvud has extracted from the economics of Keynes is the potential for failures in the intertemporal coordination of activities in complex market systems. In his path-breaking book of 1968, he attacked standard Keynesian Economics for its view on frictions, which reduces the causes of macroeconomic pathologies to nominal rigidities. With the rise of DSGE-based New Keynesian Economics, Leijonhufvud has pointed out that ‘standard macroeconomics’ is still stuck in the frictions view. Referring to recent financial crises, he considers DSGE modelling to be hopelessly inadequate for dealing with such macroeconomic instability. Yet, the financial frictions literature in New Keynesian Economics claims to have found ways to incorporate financial crises into DSGE frameworks. The article describes continuity and change in Leijonhufvud’s critique of Old and New Keynesians, and assesses contrary claims to progress made in the DSGE world.
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BRESSER-PEREIRA, LUIZ CARLOS. "From classical developmentalism and post-Keynesian macroeconomics to new developmentalism." Brazilian Journal of Political Economy 39, no. 2 (June 2019): 187–210. http://dx.doi.org/10.1590/0101-31572019-2966.
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ABSTRACT New developmentalism was a response to the inability of classical developmentalism and post-Keynesian macroeconomics in leading middle-income countries to resume growth. New developmentalism was born in the 2000s to explain why Latin American countries stopped growing in the 1980s, while East Asian countries continued to catch up. This paper compares new developmentalism with classical developmentalism, which didn’t have a macroeconomics, and with post-Keynesian economics, whose macroeconomics is not devoted to developing countries. And shows that to follow the East Asian example is not enough industrial policy, it is also necessary a macroeconomic policy that sets the five macroeconomic prices right, rejects the growth with foreign savings policy, and keeps the macroeconomic accounts balanced.
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Tobin, James. "Price Flexibility and Output Stability: An Old Keynesian View." Journal of Economic Perspectives 7, no. 1 (February 1, 1993): 45–65. http://dx.doi.org/10.1257/jep.7.1.45.
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In this symposium I shall play the role in which I was cast, the unreconstructed old Keynesian. Considering the alternatives, I do not mind being billed as a Keynesian, an old Keynesian at that. But old Keynesians come in several varieties, and I speak for no one but myself. Nor do I defend the literal text of The General Theory. Several generations of economists have criticized, amended, and elaborated that seminal work. I shall argue for the validity of the major propositions that distinguish Keynesian macroeconomics from old or new classical macroeconomics.
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Kim, Jin-Ock. "User’s Guide for New Keynesian Macroeconomics." Jeju National University Tourism, Business, and Economic Research Institute 37, no. 4 (November 30, 2017): 13–22. http://dx.doi.org/10.24907/jtir.2017.11.37.4.13.
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Zamulin, O. "The Concept of Real Economic Cycles and Its Role in Evolution of Macroeconomics." Voprosy Ekonomiki, no. 1 (January 20, 2005): 144–53. http://dx.doi.org/10.32609/0042-8736-2005-1-144-153.
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The article discusses the contribution of the 2004 Nobel Prize winners in Economics, F. Kydland and E. Prescott, to business cycle theory. To place this contribution in historical perspective, development of macroeconomic science at large, beginning with 1930, is discussed, including the early Keynesian theories, rational expectations revolution, and the modern debate between New Keynesians and New Classicals. Special emphasis is then made on the differences between the modern general equilibrium theories proposed by Kydland and Prescott and the supporters of theories based on sticky prices and imperfect information. The article is concluded by a discussion of room for consensus between these two branches of macroeconomics.
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Beltratti, Andrea. "L’economia dell’equilibrio." Journal of Public Finance and Public Choice 3, no. 2 (October 1, 1985): 97–108. http://dx.doi.org/10.1332/251569298x15668907117101.
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Abstract The new classical macroeconomists have widely criticized Keynesian economics during the last fifteen years; most of all, on the basis of a lack of microfoundations to Keynesian models and theories.The rational expectations hypothesis is necessary but not sufficient, by itself, to deny the policy effectiveness results advocated by Keynesian theorists; the most important hypothesis, and the most characteristic feature, of the new classical school is continuous market-clearing on each market. Rational expectations can be used also in disequilibrium models, and can even strengthen policy effectiveness results.This paper considers some interesting points made by the equilibrium theorists, such as the Lucas critique and the equilibrium business cycles, and also tries to show some limits of the models.The debate between Keynesians and New Classical Economists is very useful; both schools are able to benefit from the valuable insights of the last few years, which allow theorists to hope in a substantial improvement of macroeconomics as a science and as a tool to understand the working of today’s economic systems.
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BEKAERT, GEERT, SEONGHOON CHO, and ANTONIO MORENO. "New Keynesian Macroeconomics and the Term Structure." Journal of Money, Credit and Banking 42, no. 1 (February 2010): 33–62. http://dx.doi.org/10.1111/j.1538-4616.2009.00277.x.
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Artamonova, L. N. "POST-KEYNESIANISM: EVOLUTION OF KEYNESIAN MACROECONOMICS IN THE 20TH CENTURY." MGIMO Review of International Relations, no. 6(51) (December 28, 2016): 106–14. http://dx.doi.org/10.24833/2071-8160-2016-6-51-106-114.
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The article analyzes the development of J.M. Keynes's theory in the second half of the twentieth century due to the works within the new direction of economical science - Post-Keynesianism. It is shown that in free-market economy Keynesian school based of the original Keynesian methodology requires additional studies of state regulation principles and take into account the qualitative changes in the market mechanisms. It is shown that post-Keynesianism has had a significant impact on the subject of research and has taken into account the principles of free enterprise, market pricing, level of price dynamics. All this principles allow realizing the principle of self-regulation of the market mechanism. New approaches to the post-Keynesians role of the state and state regulation combined with the freedom of entrepreneurship are analyzed. Taking into account real changes and economic crises it is necessary to analyze the main directions of development of the Keynesian model of economic regulation with a view to their effective use in shaping economic policy. There are considered the basic directions of development of post-Keynesianism such as Neo-Ricardian theory of value and prices of goods based on direct costs of production in the framework of macroeconomic model by P. Sraffa, information theory of "fundamental" uncertainty of the future by R. Klauder and the theory of financial instability hypothesis by H. Minsky. Their differences within the framework of post-Keynesianism under the subject specialization are considered. It is noted that the development of PostKeynesianism allows to present the latest research in modern Keynesian school within an interdisciplinary approach to economical problems.
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Arestis, Philip, Fernando Filho, and Terra Bittes. "Keynesian macroeconomic policy: Theoretical analysis and empirical evidence." Panoeconomicus 65, no. 1 (2018): 1–20. http://dx.doi.org/10.2298/pan1801001a.
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Investment depends on subjective factors, such as expectations, conventions, and confident animal spirits. In a context of economic instability and crises, economic policy is the main source to support entrepreneurs? expectations and investment. In this sense, macroeconomic policies are capable of affecting effective demand and building a good institutional environment, which is essential to keep the entrepreneurs? expectations confident and promote their animal spirits. Given these propositions, this contribution has two objectives. The first is to develop a Keynesian type of macroeconomic policy able to stimulate investment and effective demand, and, as a result, mitigate unemployment. The idea is to offer alternative macroeconomic policy prescriptions in relation to the New Consensus Macroeconomics one. This proposal aims to establish the role, according to the Post Keynesian view, the logic of operation of each policy, and the proper coordination among these Keynesian macroeconomic policies. The second objective is to present, briefly, relevant empirical evidence of the Post Keynesian macroeconomic policies.
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Galí, Jordi. "The State of New Keynesian Economics: A Partial Assessment." Journal of Economic Perspectives 32, no. 3 (August 1, 2018): 87–112. http://dx.doi.org/10.1257/jep.32.3.87.
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In August 2007, when the first signs emerged of what would come to be the most damaging global financial crisis since the Great Depression, the New Keynesian paradigm was dominant in macroeconomics. Ten years later, tons of ammunition has been fired against modern macroeconomics in general, and against dynamic stochastic general equilibrium models that build on the New Keynesian framework in particular. Those criticisms notwithstanding, the New Keynesian model arguably remains the dominant framework in the classroom, in academic research, and in policy modeling. In fact, one can argue that over the past ten years the scope of New Keynesian economics has kept widening, by encompassing a growing number of phenomena that are analyzed using its basic framework, as well as by addressing some of the criticisms raised against it. The present paper takes stock of the state of New Keynesian economics by reviewing some of its main insights and by providing an overview of some recent developments. In particular, I discuss some recent work on two very active research programs: the implications of the zero lower bound on nominal interest rates and the interaction of monetary policy and household heterogeneity. Finally, I discuss what I view as some of the main shortcomings of the New Keynesian model and possible areas for future research.
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Bresser-Pereira, Luiz Carlos. "New Developmentalism: development macroeconomics for middle-income countries." Cambridge Journal of Economics 44, no. 3 (December 30, 2019): 629–46. http://dx.doi.org/10.1093/cje/bez063.
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Abstract This article resumes New Developmentalism—a theoretical framework being defined since the early 2000s to understand middle-income countries. It is constituted of a political economy and development macroeconomics and originated in development economics and post-Keynesian macroeconomics. From the start, it is an open and development-oriented economics. New Developmentalism focuses on two macroeconomic accounts, the fiscal and the current accounts, and in five macroeconomic prices which the market is unable to keep ‘right’. It affirms that the exchange rate tends to be cyclically overvalued, thus making the competent companies non-competitive and leading the economy to go from crisis to crisis, to the extent that countries are irresponsible in fiscal terms and search to grow with foreign indebtedness. New Developmentalism has a new definition of Dutch disease, and a means to neutralise it. Counterintuitively, it argues that middle-income countries should reject external finance and balance the current account.
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Arestis, Philip, and Malcolm Sawyer. "New consensus macroeconomics and inflation targeting: Keynesian critique." Economia e Sociedade 17, spe (December 2008): 629–53. http://dx.doi.org/10.1590/s0104-06182008000400006.
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Hairault, Jean-Olivier, and Franck Portier. "Money, New-Keynesian macroeconomics and the business cycle." European Economic Review 37, no. 8 (December 1993): 1533–68. http://dx.doi.org/10.1016/0014-2921(93)90121-p.
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CAPRIATA, WILLIAM, and LEONARDO FLAUZINO DE SOUZA. "The exchange rate in Orthodox, Keynesian and New Developmentalism theoretical models: a literature review." Brazilian Journal of Political Economy 41, no. 2 (April 2021): 220–35. http://dx.doi.org/10.1590/0101-31572021-3126.
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ABSTRACT The main purpose of this paper is to present the differences in the exchange rates in macroeconomic models from the three current theoretical views: Orthodox, Post-Keynesian and New Developmentalism. To achieve this objective, it is proposed to make a bibliographic survey of the literature on open macroeconomics and exchange rate. The main differences among these views concerns to exchange rate determination, causes of exchange rate variations and balance of payments equilibrium determination.
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Nikiforov, A., and O. Antipina. "Behavioral macroeconomics: Towards a newsynthesis?" Voprosy Ekonomiki, no. 12 (December 20, 2016): 88–103. http://dx.doi.org/10.32609/0042-8736-2016-12-88-103.
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This article overviews the existing possibilities of synthetizing New Keynesian optimization models with the research in behavioral economics. These approaches allow to build empirically adequate macroeconomic models and to expound this framework as a new research program, as a unification of traditional macroeconomic theory and behavioral economics.
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Nikiforov, Alexandr, Olga Antipina, and Nina Miklashevskaya. "Macroeconomics as a Set of Scientific Research Programmes: New Opportunities and Competitive Advantages." Moscow University Economics Bulletin 2015, no. 2 (April 30, 2015): 3–16. http://dx.doi.org/10.38050/01300105201521.
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The authors consider Macroeconomics as a set of interrelateol research programmes which incorporates such schools of thought as Neoclassical, Keynesian, Neoclassical synthesis, Monetarism, New Classical and New Keynesian. This approach has a number of competitive advantages over a standard course and provides new opportunities for researchers, academics, entrepreneurs and students of economic theory.
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Rowthorn, Robert. "The Godley-Tobin lecture." Review of Keynesian Economics 8, no. 1 (January 22, 2020): 1–20. http://dx.doi.org/10.4337/roke.2020.01.01.
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This paper surveys some of the main developments in macroeconomics since the anti-Keynesian counter-revolution 40 years ago. It covers both mainstream and heterodox economics. Amongst the topics discussed are: New Keynesian economics, Modern Monetary Theory, expansionary fiscal contraction, unconventional monetary policy, the Phillips curve, hysteresis, and heterodox theories of growth and distribution. The conclusion is that Keynesian economics is alive and well, and that there has been a degree of convergence between heterodox and mainstream economics.
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King, Robert G. "Will the New Keynesian Macroeconomics Resurrect the IS-LM Model?" Journal of Economic Perspectives 7, no. 1 (February 1, 1993): 67–82. http://dx.doi.org/10.1257/jep.7.1.67.
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The IS-LM model has no greater prospect of being a viable analytical vehicle for macroeconomics in the 1990s than the Ford Pinto has of being a sporty, reliable car for the 1990s. Because of its treatment of expectations, the IS-LM model, as traditionally constructed and currently used, is a hazardous base on which to build positive theories of business fluctuations and to undertake policy analysis. To simplify economic reality sufficiently to use the IS-LM model as an analytical tool, economists must essentially ignore expectations; we now know that this simplification eliminates key determinants of aggregate demand. The last two decades of research have taught economists that the assumption of rational expectations is a powerful part of economic explanations of individual and market behavior, ranging from consumption and investment dynamics to pricing of stocks and bonds. The emphasis on expectations in the macro-model is the end result of a process of building microeconomic underpinnings that was initiated in the 1950s and 1960s, when the goal was to develop dynamic theoretical foundations for the IS and LM schedules; inevitably, consideration of dynamic choice pushed the question of expectations to the forefront. As a result, most of the equations of the ISLM model are now viewed as summarizing purposeful economic behavior in which choices over time play a central role. However, as we will see, this finding means there is no way to maintain traditional uses of the IS-LM model.
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Bofinger, Peter, Eric Mayer, and Timo Wollmershäuser. "Teaching New Keynesian Open Economy Macroeconomics at the Intermediate Level." Journal of Economic Education 40, no. 1 (January 2009): 80–102. http://dx.doi.org/10.3200/jece.40.1.080-102.
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Lengnick, Matthias, and Hans-Werner Wohltmann. "Agent-based financial markets and New Keynesian macroeconomics: a synthesis." Journal of Economic Interaction and Coordination 8, no. 1 (August 5, 2012): 1–32. http://dx.doi.org/10.1007/s11403-012-0100-y.
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Cho, Namun, and Tae-Seok Jang. "Asset Market Volatility and New Keynesian Macroeconomics: A Game-Theoretic Approach." Computational Economics 54, no. 1 (June 9, 2017): 245–66. http://dx.doi.org/10.1007/s10614-017-9705-5.
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Bresser-Pereira, Luiz Carlos. "New and Classical Developmentalism compared: a response to Medeiros." Review of Keynesian Economics 8, no. 2 (April 7, 2020): 168–77. http://dx.doi.org/10.4337/roke.2020.02.02.
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New Developmentalism, which Carlos Medeiros (2020) criticizes, is a new theoretical approach to development macroeconomics and the political economy of middle-income countries. It is a system of thought whose roots are in Post-Keynesian economics and Classical Developmentalism, but it is an open and growth-oriented approach. This paper summarizes the new theoretical framework. Thereafter, it responds to the indictments that New Developmentalism is neither a Post-Keynesian nor a developmental theory, but rather an expression of the ‘market failure approach,’ ‘methodological nationalism,’ the ‘mistaken’ association of exchange-rate economic growth, etc. The paper then argues that New Developmentalism is a system of thought that responds to the new realities of the globalized world and compares New Developmentalism with Classical Developmentalism.
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Guerrazzi, Marco. "PROSPERITY FOR ALL: AN ASSESSMENT OF THE “FARMERIAN” REMEDIES TO PREVENT FINANCIAL CRISES AND REDUCE UNEMPLOYMENT." Macroeconomic Dynamics 23, no. 3 (August 17, 2017): 1287–93. http://dx.doi.org/10.1017/s1365100517000220.
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In a recent book, Roger Farmer offers a quick but exhaustive rundown of the research agenda that he drove forward over the last 10 years with the aim to offer a novel microfoundation for Keynesian macroeconomics and—as a by-product—providing practical remedies to prevent financial crises, reduce unemployment, and ensure prosperity for all. In that work, the Farmerian arguments question the conventional visions underlying the Neo-Classical and New Keynesian paradigms and the addressed topics cover relevant theoretical, empirical, and policy issues that have been widely debated after the Great Recession of 2007–2009.
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Ascari, Guido, and Argia M. Sbordone. "The Macroeconomics of Trend Inflation." Journal of Economic Literature 52, no. 3 (September 1, 2014): 679–739. http://dx.doi.org/10.1257/jel.52.3.679.
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Most macroeconomic models for monetary policy analysis are approximated around a zero inflation steady state, but most central banks target an inflation rate of about 2 percent. Many economists have recently proposed even higher inflation targets to reduce the incidence of the zero lower bound constraint on monetary policy. In this survey, we show that the conduct of monetary policy should be analyzed by appropriately accounting for the positive trend inflation targeted by policymakers. We first review empirical research on the evolution and dynamics of U.S. trend inflation and some proposed new measures to assess the volatility and persistence of trend-based inflation gaps. We then construct a Generalized New Keynesian model that accounts for a positive trend inflation. In this model, an increase in trend inflation is associated with a more volatile and unstable economy and tends to destabilize inflation expectations. This analysis offers a note of caution regarding recent proposals to address the existing zero lower bound problem by raising the long-run inflation target. (JEL E12, E31, E32, E52, E58)
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SNOWDON, BRIAN. "OUTSIDE THE MAINSTREAM: AN INTERVIEW WITH AXEL LEIJONHUFVUD." Macroeconomic Dynamics 8, no. 1 (January 30, 2004): 117–45. http://dx.doi.org/10.1017/s1365100503030050.
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Axel Leijonhufvud made an enormous impact on macroeconomics in the late 1960s with the publication of his bookOn Keynesian Economics and the Economics of Keynes: A Study of Monetary Economics(1968). In this famous book, Leijonhufvud argued that the standard neoclassical synthesis (Hicks–Hansen IS-LM) interpretation of the General Theory totally misunderstood and misinterpreted Keynes. However, during the 1970's, interest in Keynes and Keynesian models waned as new classical equilibrium models became all the rage. Nevertheless, Leijonhufvud, from a position outside the mainstream, continued his research into problems of unemployment, business cycles, and inflation—issues that from his perspective are problems of coordination failure in complex dynamical systems. Axel Leijonhufvud is currently Professor Emeritus at the University of California, Los Angeles, and, since 1995, Professor of Monetary Economics at the University of Trento, Italy. In this interview the author discusses with Leijonhufvud a wide range of issues relating to his own work as well as his views on the development of macroeconomics after Keynes.
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Kaplan, Greg, and Giovanni L. Violante. "Microeconomic Heterogeneity and Macroeconomic Shocks." Journal of Economic Perspectives 32, no. 3 (August 1, 2018): 167–94. http://dx.doi.org/10.1257/jep.32.3.167.
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In this essay, we discuss the emerging literature in macroeconomics that combines heterogeneous agent models, nominal rigidities, and aggregate shocks. This literature opens the door to the analysis of distributional issues, economic fluctuations, and stabilization policies—all within the same framework. In response to the limitations of the representative agent approach to economic fluctuations, a new framework has emerged that combines key features of heterogeneous agents (HA) and New Keynesian (NK) economies. These HANK models offer a much more accurate representation of household consumption behavior and can generate realistic distributions of income, wealth, and, albeit to a lesser degree, household balance sheets. At the same time, they can accommodate many sources of macroeconomic fluctuations, including those driven by aggregate demand. In sum, they provide a rich theoretical framework for quantitative analysis of the interaction between cross-sectional distributions and aggregate dynamics. In this article, we outline a state-of-the-art version of HANK together with its representative agent counterpart, and convey two broad messages about the role of household heterogeneity for the response of the macroeconomy to aggregate shocks: 1) the similarity between the Representative Agent New Keynesian (RANK) and HANK frameworks depends crucially on the shock being analyzed; and 2) certain important macroeconomic questions concerning economic fluctuations can only be addressed within heterogeneous agent models.
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Farmer, Roger E. A. "Macroeconomics for the 21st Century: Full Employment as a Policy Goal." National Institute Economic Review 211 (January 2010): R45—R50. http://dx.doi.org/10.1177/0027950110364104.
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This paper describes research that integrates Keynesian and Walrasian economics in a new way. The author develops a model in which high unemployment can persist and any unemployment rate can occur as an equilibrium. Equilibrium is selected by the self-fulfilling beliefs of asset market participants. Using this new framework, the author argues that fiscal policy is not the best solution to the problem of restoring full employment. A policy of asset market management, similar to quantitative easing, is put forward as a more effective approach.
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Dimand, Robert W. "The Fall and Rise of Irving Fisher's Macroeconomics." Journal of the History of Economic Thought 20, no. 2 (June 1998): 191–201. http://dx.doi.org/10.1017/s1053837200001851.
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The history of economics provides many examples of economists, such as A. A. Cournot, and J. H. Von Thunen, whose work became influential only long after it was written. Others, like Francis A. Walker, loomed large during their careers, only to fade in the discipline's memory. Irving Fisher's reputation has followed a much less common trajectory. Once the most cited monetary economist, the subject of major review articles and the center of controversies over theory and policy, Fisher lost the profession's attention, vanished from citation lists in macroeconomics, and was regarded as an embarrassment by colleagues in his university and his discipline. Then, after his death, his contributions to macroeconomics became increasingly cited and influential, as macroeconomics developed in ways that brought it closer to Fisher's approach. New approaches have been found prefigured in Fisher's work, as when a 1926 article of his was reprinted in the Journal of Political Economy in 1973 as “I Discovered the Phillips Curve” (Fisher, 1997, 8). Fisher was once caricatured in introductory textbooks as the supposed exponent of a constant-velocity version of the quantity theory of money, the exemplar of simplistic pre- Keynesian economics swept away in the Keynesian Revolution, but recently there has been attention to Fisher as, in Keynes's phrase, “the great grandparent” of The General Theory, “who first influenced me strongly towards regarding money as a ‘real’ factor” (Keynes, 1971-89, 14, pp. 203 n.; Dimand, 1995; Kregel, 1988).
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SILVA, VICTOR CRUZ E., and MARCELO CURADO. "Crossing boundaries: an assessment to the influence of post-Keynesianism on developmental macroeconomics." Brazilian Journal of Political Economy 38, no. 4 (October 2018): 611–28. http://dx.doi.org/10.1590/0101-35172018-2827.
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ABSTRACT Developmental macroeconomics, the economic theory that grounds new developmentalism, is a heterodox approach whose establishment was deeply influenced by dissonant schools of thought. Among these, post-Keynesianism occupies a special place. This essay aims at identifying the aspects of developmental macroeconomics in which this post-Keynesian influence is more notorious. To serve this purpose, we compare the economic diagnoses, social objectives and policy prescriptions defended by the partisans of these two schools of economic thought. Our conclusion is that despite the significant influence of post-Keynesianism in the formation of the new developmentalist strategy, there are several aspects of this strategy that must be understood as an original contribution of the Brazilian developmental school.
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Bánfi, Tamás. "Savings and investment equality does not prevail according to Keynesian definitions." Archives of Business Research 7, no. 9 (September 10, 2019): 97–105. http://dx.doi.org/10.14738/abr.79.7064.
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Aside from the general government and the non-resident sector, textbooks on macroeconomics uniformly define the following correlation under the terms investment and saving: I = S. The I = S equality is naturally and legitimately interpreted by macroeconomic textbooks almost without exception as the equality between intended investments and intended savings, because the equality ‒ if we accept it ‒ is not only a definitive identity, but generally the outcome of market mechanisms that take time. Keynes’s first critic was Robertson who claimed that “his analysis corresponded to what common-sense proclaims (even to the simple-minded) to be the essence of the matter; namely, the power possessed by the public and by the monetary authority to alter the rates of income flow – the former by putting money into and out of store, the latter by putting it into and out of existence. Thus, in his definition, I = S + (A + B), in which A is new money and B is reactivated idle balances. ” Robertson's comment could have been addressed with a simple correction, and the tool used for funding the expansion of state (public) investments, i.e. the government deficit financed by the creation of new money, is a consistent element of the theoretical framework.
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Prascevic, Aleksandra. "The return to keynesianism in overcoming cyclical fluctuations?" Ekonomski anali 53, no. 177 (2008): 30–58. http://dx.doi.org/10.2298/eka0877030p.
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The problems faced by the American economy in the second half of 2007, which intensified in 2008, have once again asked economic science, and even more so economic policy, questions relating to business cycles - the reasons for cyclical fluctuations, the character of business cycles and, naturally, economic policy measures that can be implemented to alleviate and overcome an economic recession. Since the 1970s, business cycle theories have been intensively developed - ranging from monetary theories, developed within monetarism and the first phase of New Classical Macroeconomics, to the real business cycle theory of New Classical Macroeconomics. Consequently, the triggers for the beginning of a cycle can be monetary (monetary theories) or real in the form of technological shocks (real business cycles). In essence economic policy conducted since the 1970s, has rejected the Keynesian explanations of the functioning of the economic system, and thus the policy of aggregate demand management. However, the measures that are now being implemented in the USA point to a return to Keynesianism. This refers, above all, to attempts to compensate for the inefficiency of monetary policy with fiscal expansion. All three psychological propensities (propensity to consume, propensity to invest and liquidity preference) in Keynes's theory and applied in Keynesian economic policy, are still the significant determinants of monetary and fiscal policies. The return to Keynesianism points to the depth of the crisis faced by the USA, but also confirms the vitality of Keynesian economics and affirms the view that - although Keynes wished to present his theory as being "general" - it is actually the theory of economic depression.
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Rampa, Giorgio. "Marcello Messori (ed.) Financial Constraints and Market Failures. The Microfoundations of New Keynesian Macroeconomics." Economic Notes 30, no. 2 (July 2001): 313–17. http://dx.doi.org/10.1111/j.0391-5026.2001.00059.x.
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Goodhart, Charles. "Whatever Became of the Monetary Aggregates?" National Institute Economic Review 200 (April 1, 2007): 56–61. http://dx.doi.org/10.1177/0027950107080389.
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My title intentionally harks back to Maurice Peston's slim, but excellent, 1980 book, entitled Whatever Happened to Macro-economics. In this book, a compilation of three lectures, Maurice asks how much then remained of traditional Keynesian macroeconomics in the aftermath of the monetarist counter-revolution, and of the development of Lucasian rational expectations. Maurice was much more impressed by the new contributions of the rational expectations school than he was of those by the more traditional monetarists.
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Togati, Teodoro Dario. "Ulysses’ journey home to Ithaca: a new metaphor for understanding the General Theory." Cambridge Journal of Economics 44, no. 6 (June 23, 2020): 1395–414. http://dx.doi.org/10.1093/cje/beaa020.
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Abstract This paper argues that in order to remedy the lack of alternative methods in current macroeconomics it is necessary to clarify the ontology of Keynes’s General Theory. One of the reasons why Keynes lost his generality battle is that he left many gaping holes in the ‘correct’ articulation of his research programme—especially in terms of the specification of hard-core ‘cosmological’ beliefs concerning stability, value and aggregate behaviour—yet to be filled by the post-Keynesian literature. In order to start filling the gaps, this paper proposes a new agenda called ‘The General Theory 4.0’ based on the new ‘Ulysses’ journey’ metaphor, which, it shows, is better than alternative ones, such as Farmer’s ‘windy boat’ and Akerlof and Shiller’s ‘rollercoaster’, for improving understanding of Keynes’s book.
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Boumans, Marcel. "The Engineering Tools That Shaped the Rational Expectations Revolution." History of Political Economy 52, S1 (December 1, 2020): 143–67. http://dx.doi.org/10.1215/00182702-8717960.
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The rational expectations revolution was not based only on the introduction of Muth’s idea of rational expectations to macroeconomics; this introduction alone cannot explain the more drastic changes to the mathematical toolbox, concepts, and research strategies since the 1980s. The shift from “Keynesian economics” to “new classical economics” is based on a shift from a control engineering approach to an information engineering methodology. This “revolution” was even more radical; it also changed the epistemology and ontology of macroeconomics. The ontology of information engineering, and hence of new classical economics, is a world populated by machines that communicate by the exchange of noisy information. The decisions these machines make are conditioned on the (noisy) information they have about the current state of the world but which at the same time will affect future states. Policy in this world therefore means tracing an optimal trajectory taking all these issues into account. To show this shift in epistemology and ontology, the history of economics is interwoven with the history of mathematics, which cannot be detangled from the emergence of the digital computer. The computer changed the nature of mathematics in a specific way by adopting a new concept of solution, namely the algorithm.
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REZNIKOVA, NATALIIA, Volodymyr PANCHENKO, and Oksana IVASHCHENKO. "FROM THE SYNTHESIS OF ECONOMIC THEORIES TO POLITICAL CONSENSUS: MONETARY AND FISCAL DILEMMAS OF MACROECONOMIC STABILIZATION IN THE CONTEXT OF THE CORONAVIRUS CRISIS." Economy of Ukraine 2021, no. 4 (April 24, 2021): 3–29. http://dx.doi.org/10.15407/economyukr.2021.04.003.
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An analysis of government programs for macroeconomic stabilization of selected countries is made to establish their compliance with scientific approaches that determine the political choice in favor of the use of monetary and/or fiscal instruments for stimulation of economic activity based on the revision of the substantive provisions of neoclassical synthesis and the new macroeconomic consensus to highlight the peculiarities of interpretation of macroeconomic processes, the nature of cyclical fluctuations and ways to level and adjust them. It is established that the most popular in the political sphere are the conclusions of the new neoclassical synthesis (New Consensus in Macroeconomics), which combines the new Keynesian approach and the real business cycle approach, however, they are also adjusted in any form, depending on the priority of the government. (the desire to achieve full employment; price stabilization; economic growth and balance of payments; efficient use of limited resources), provide mostly short-term planning horizon, which complicates the exit from the “vicious circle” of economic policy, when its dynamic development becomes hostage to the need for constant adaptation in accordance with the changing conditions, which it itself by its own adjustment causes. It was found that in the situation of the Coronavirus crisis the issues of combating the simultaneous shocks of supply and demand, and unemployment in particular, are recognized as a priority and sought to be addressed through a combination of monetary and fiscal policy tools, including regulatory competition by neoprotectionism. defined by us as a set of principles, tools and methods of regulatory policy in international trade, international capital movements and foreign investment, as well as international monetary, financial and credit relations, the imperative of which is to stimulate socio-economic development and economic growth by creating conditions for increasing the economic activity of all economic entities.
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Boianovsky, Mauro, and Hans-Michael Trautwein. "Wicksell after Woodford." Journal of the History of Economic Thought 28, no. 2 (June 2006): 171–85. http://dx.doi.org/10.1080/10427710600676447.
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The New Neoclassical Synthesis that Michael Woodford puts forward in his Interest and Prices (2003) is primarily a synthesis of New Classical and New Keynesian ideas. Yet Woodford presents it as an encompassing approach that goes much further back in time to integrate the pre-Keynesian macroeconomics of Knut Wickseil and his followers. Starting with the title, the book contains many references to Geldzins und Güterpreise (1898), Wicksell's landmark contribution to monetary theory which was translated as Interest and Prices in 1936. Woodford relates his concept of a “monetary policy without money” to Wicksell's concept of the pure credit system and to Wicksell's proposal to eliminate inflation by adjusting nominal interest rates to changes in the price level—an idea that has much in common with modern policy rules à la Taylor. He presents the core model of the new synthesis (in shorthand: IS + AS + Taylor rule) as a “neo-Wicksellian framework” that serves to analyze the dynamics of interest-rate gaps and output gaps (2003, chapter 4). Referring to the Wicksellians of the 1920s and 1930s (primarily Erik Lindahl, Gunnar Myrdal, and Friedrich A. Hayek), Woodford grounds his advocacy of rules to fight inflation on the potential non-neutrality of monetary policy: “[I]t is because instability of the general level of prices causes substantial real distortions—leading to inefficient variation both in aggregate employment and output and in the sectoral composition of economic activity—that price stability is important” (2003, p. 5). He thus sees his analysis of interest-rate and output gaps as “an attempt to resurrect a view” that the old Wicksellians had developed in their analyses of cumulative processes.
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Brůna, Karel. "Imperfect competition, menu costs and near rationality as a source of the nominal price rigidity in the new keynesian macroeconomics." Politická ekonomie 51, no. 6 (December 1, 2003): 901–14. http://dx.doi.org/10.18267/j.polek.445.
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Hall, S. G., and R. Herbert. "Consistent Simulations and the National Institute Model 8." National Institute Economic Review 115 (February 1986): 64–73. http://dx.doi.org/10.1177/002795018611500107.
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This paper will present a set of simulation exercises, and discuss some of the methodological issues arising from the new National Institute Model 8. This model has been developed from earlier models used at the National Institute and has much in common with those models. In particular, it adheres to a traditional income-expenditure framework and is, in broad outline, a Keynesian model. The new feature of Model 8 which distinguishes it from its predecessors is the explicit widespread treatment of expectations. Recognition of the importance of expectations in macroeconomics is widely disseminated and much attention has been given recently in the econometric literature to the modelling of expectations. Model 8 now includes explicit expectations terms in the following sectors: employment, stockbuilding, investment, wage formation, the exchange rate and the demand for money. The details of individual equation estimation and specification may be found in Hall and Henry (1985a) and will not be given here. In the estimation process much use has been made of the rational expectations hypothesis, while in the full model implementation expectations may be formed either consistently or on the basis of explicit expectations models.
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Sadeghi, Farzaneh, and Saeed Khadivy Rofougar. "THE MONEY DEMAND FUNCTIONS IN ISLAMIC ECONOMY: NEW EVIDENCE FROM IRAN-ARDL APPROACH." Journal of Islamic Monetary Economics and Finance 4, no. 2 (February 9, 2019): 205–22. http://dx.doi.org/10.21098/jimf.v4i2.922.
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The demand for money is one of the most fundamental issues of the monetary economy for policy decision. On the other hand, according to the principle of prohibition of Riba, attitudes about the money market conditions in Islamic economics, is quite different from conventional economics. Hence achieving the money demand function in an Islamic country would be necessary.
Most studies about the money demand in Islamic economy used the Keynesian approach, while in modern macroeconomics, money demand function derived by using the microeconomics-based approach. Hence in this article investigate some models of the microeconomics-based approach, then, in accordance with Islamic principles, it choose the best among them that is shopping-time model. After that we derive the Islamic money demand function. The results indicate that the demand for money is the function of income and rental rates of sukuk. The marginal product of capital due to an additional unit of income spend for Infaq (spending in Allah's way), depend on the expected inflation rate, depreciation rate and rental rates of Sukuk.
In this paper, apply ARDL approach to estimate the money demand function in Islamic republic of Iran in period of 1978-2008 i.e. after Islamic revolution. The results suggested that M1 and M2 money demand are co-integrated with income and rental rate of Sukuk. Incorporating CUSUM and CUSUMSQ tests into co-integration analysis, we conclude that M2 money demand is more stable than M1.
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Bowles, Samuel, and Wendy Carlin. "What Students Learn in Economics 101: Time for a Change." Journal of Economic Literature 58, no. 1 (March 1, 2020): 176–214. http://dx.doi.org/10.1257/jel.20191585.
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We make the case for a shift in what students learn in a first economics course, taking as our exemplar Paul Samuelson’s paradigm-setting 1948 text. In the shadow of the Great Depression, Samuelson made Keynesian economics an essential component of what every economics student should know. By contrast, leading textbooks today were written in the glow of the Great Moderation and the tamed cyclical fluctuations in the two decades prior to 2007. Here, using topic modeling, we document Samuelson’s novelty and the evolution of the content of introductory textbooks since, and we put forward three propositions. First, as was the case in the aftermath of the Great Depression, new problems now challenge the content of our introductory courses; these include mounting inequalities, climate change, concerns about the future of work, and financial instability. Second, the tools required to address these problems, including strategic interaction, limited information, principal–agent models, new behavioral foundations, and dynamic processes including instability and path dependence, are available (indeed widely taught in PhD programs). And third, as we will illustrate by reference to a new open access introductory text, a course integrating these tools into a new benchmark model can be accessible, engaging, coherent and, as a result, successfully taught to first-year students. Deployed to address the new problems, following Samuelson’s example, the new benchmark provides the basis for integrating not only micro- and macroeconomics but also the analysis of both market failures and the limits of government interventions. ( JEL A22, D00, E00).
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Milner, Samuel. "Assuming Direct Control: The Beguiling Allure of Incomes Policies in Postwar America." Journal of Policy History 31, no. 1 (November 30, 2018): 42–71. http://dx.doi.org/10.1017/s0898030618000337.
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Abstract:Histories of American economic policymaking after World War II often describe a “Fiscal Revolution,” in which Keynesian macroeconomic tools replaced the microeconomic regulations and reforms of the New Deal. This article challenges that narrative by demonstrating how the Keynesian economists responsible for the Fiscal Revolution relied upon incomes policies to ensure that inflation would not sabotage efforts to achieve full employment. In the 1960s, the White House Council of Economic Advisers pressed the Kennedy and Johnson administrations to enforce “wage-price guideposts” in order to realize the potential of the Fiscal Revolution. Yet incomes policies also encouraged policymakers to deflect responsibility for inflation onto the private sector’s behavior as an alternative to adopting the painful but necessary fiscal and monetary restraint. As a reliance on the microeconomic control of inflation persisted into the late 1970s, this approach ultimately undercut the Keynesians’ macroeconomic promises and prolonged the misery of stagflation.
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Deus, Larissa Naves de. "Dinâmica da inflação e política monetária no Brasil: uma leitura pós-keynesiana com uso da metodologia de Vetores Autorregressivos (VARs)." RACE - Revista de Administração, Contabilidade e Economia 17, no. 1 (April 23, 2018): 283–312. http://dx.doi.org/10.18593/race.v17i1.13027.
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Resumo: Muitos países, a partir da década de 1990, passaram a utilizar o Regime de Metas de Inflação (RMI) como regime de política monetária, inclusive o Brasil, que o adotou em 1999. Entretanto, há inúmeras críticas ao modo de funcionamento desse regime, além da análise das consequências de seu uso à dinâmica macroeconômica dos países. No contexto do RMI, consideram-se os desvios do produto de seu nível natural à causa do aumento generalizado dos preços, e, assim, utiliza-se a taxa de juros como instrumento de política monetária. Neste trabalho, seguindo-se uma perspectiva pós-keynesiana, que tece críticas a esse regime, inclusive ao considerar que a inflação é um fenômeno multicausado, teve-se como objetivo investigar empiricamente quais são as variáveis explicativas das causas da inflação brasileira no período pós-RMI, especificamente, de 2003 a 2016. Assim, objetiva-se, inclusive, debater se a política monetária baseada nesse regime é condizente com o funcionamento de economias monetárias. Para tanto, além da revisão bibliográfica como método de procedimento, em que se busca apresentar as diferenças teóricas do chamado Novo Consenso Macroeconômico, que dá sustentação ao RMI, e a escola pós-keynesiana, neste trabalho utiliza-se a metodologia econométrica de Vetores Autorregressivos (VARs), que permite analisar inter-relações entre múltiplas variáveis, de modo a se auferirem as variáveis relevantes na explicação da dinâmica de preços no Brasil no período recente. Os resultados encontrados apontam que os fatores do lado da oferta da economia explicam em boa medida a dinâmica inflacionária brasileira no período analisado, indicando, assim, a fragilidade em se utilizar apenas a taxa de juros como instrumento de política monetária.Palavras-chave: Regime de Metas de Inflação. Pós-keynesianos. Inflação. Inflation dynamics and monetary policy in Brazil: a post-keynesian reading using the Self-Regressive Vector (VAR) Abstract: Many countries started to use the Inflation Target Regime (RMI) as a monetary policy regime, including Brazil, which adopted it in 1999. However, there are innumerable criticisms of the way this regime operates, besides the analysis of the consequences of its use to the macroeconomic dynamics of the countries. In the context of the RMI, the deviations of the product from its natural level are taken as the cause of the generalized increase of prices, and thus, the interest rate is used as a monetary policy instrument. This work, following a post-keynesian perspective, which criticizes this regime, including considering that inflation is a multi-caused phenomenon, aims to investigate empirically what are the explanatory variables of the causes of brazilian inflation in the post-RMI period, specifically from 2003 to 2016. Thus, it is also intended to discuss whether the monetary policy based on this regime is consistent with the operation of monetary economies. For this, in addition to the bibliographic review as a procedure method, which seeks to present the theoretical differences of the so-called New Macroeconomic Consensus, which gives support to the RMI, and the post-keynesian school, this work uses the econometric methodology of Autoregressive Vectors (VAR), which allows analyzing interrelations between multiple variables, in order to obtain the relevant variables in the explanation of the price dynamics in Brazil in the recent period. The results show that the factors on the supply side of the economy largely explain the brazilian inflationary dynamics in the period analyzed, thus indicating the fragility of using only the interest rate as a monetary policy instrument.Keywords: Inflation Target Regime. Post-keynesians. Inflation.
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Khalid, Mahmood, Wasim Shahid Malik, and Abdul Sattar. "The Fiscal Reaction Function and the Transmission Mechanism for Pakistan." Pakistan Development Review 46, no. 4II (December 1, 2007): 435–47. http://dx.doi.org/10.30541/v46i4iipp.435-447.
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Modern macroeconomics literature emphasises both the short run and long run objectives of fiscal policy [Romer (2006)]. In the short run it can be used to counter output cyclicality and/or stabilise volatility in macro variables, which is descriptively same as of effects of the short run monetary policy. Further for the long-run, fiscal policy can also affect both the demand and supply side of the economy. But in most traditional analyses it is assumed that fiscal policy would adjust to ensure the intertemporal budget constraint to be satisfied, while monetary policy is free to adjust its instruments [‘Ricardian Regime’ by Sargent (1982)] such as stock of money supply or the nominal interest rate [Walsh (2003)]. The debt financing methods, expenditure and tax powers of fiscal authorities i.e. the fiscal policy has also been seen as to affect both the supply and demand side of the economy. As noted by Baxter and King (1993), the initial Real Business Cycle models had only the supply side effects of the fiscal policy, where these were transmitted through the wealth effect and labourleisure choices of the household. Recently also New-Keynesian type models with micro-foundations and sticky prices argue that still through the supply side fiscal policy management could be accorded for stabilisation [Linnemann and Schabert (2003)]. The demand side effects of the fiscal policy could also be found only with more imperfections such as ‘Rule of Thumb’ consumers or those with liquidity constraints, which lead to exclusion of Ricardian equivalence [Gali, et al. (2005)]. But all that depends on the structure of the economy, as Blanchard and Perotti (2002) stated:
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Ivaskovsky, S. N. "J. M. KEYNES AND HIS ECONOMIC THEORY: AN ETHICAL PERSPECTIVE." MGIMO Review of International Relations, no. 3(48) (June 28, 2016): 172–87. http://dx.doi.org/10.24833/2071-8160-2016-3-48-172-187.
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The article examines the philosophical and moral foundations of the biggest economist and political philosopher of the 20th century John Maynard Keynes (1883-1946), who played an important role in rethinking a number of important provisions of the classical political economy and in creating the ideological and methodological basis of the "Keynesian revolution" and of the new field of economic analysis-macroeconomics. The author traces the main stages in the formation of ethical views of Keynes, shows that his interest in ethics as the system of values in society was dictated by the need for the new conceptual vision of economic realities and by the search of an answer to the main ethical question: "What should we do?". Attention is drawn to the fact that an understanding of the ethical orientation of economic theory by Keynes allowed him to take a critical stance towards traditional individualism and Victorian morality of thrift and moneymaking and to conclude that rational and "right" forms of individual behaviour are not a guarantee of the prosperity of society as a whole. To achieve the latter Keynes justified the necessity of "central control" by the State of the overall level of aggregate expenditure. It isstressed that the ethical views of Keynes correspond with the concept of the "ethic of responsibility"- a relatively new scientific discipline, which originated as a response to the risks of technogenic era: pollution, resource constraints, overpopulation, lack of stability of the world economy. The final part of the article analyzes one of the most important, from the point of view of Keynes, vices of capitalism - reckless proclivity of people to the multiplication of "abstract monetary wealth". It is shown that it doesn't only disfigure the psyche and consciousness of people, but also changes the direction of development of the market economy towards "speculative capitalism", which creates a threat to civilization, creativity, well-being and full development of the individual.
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Kirchgässner, Gebhard. "On the Political Economy of Economic Policy." Journal of Public Finance and Public Choice 7, no. 1 (April 1, 1989): 111–23. http://dx.doi.org/10.1332/251569298x15668907344749.
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Abstract Il limite delle tradizionali teorie macroeconomiche, sia neo-keynesiane che neo-classiche, è costituito dalle loro ipotesi idealistiche sul comportamento del governo, che non tengono conto delle istituzioni politiche.La teoria macroeconomica può, invece, essere utilizzata nel modo migliore quando si voglia indagare sui risultati che si possono attendere dalle diverse istituzioni politiche, anche se è comunque necessario tener conto del fatto che le stesse aspettative degli « operatori economici » (categoria che include non soltanto i consumatori ed i produttori, ma anche gli elettori, i burocrati ed i politici) sono influenzate dalle politiche economiche perseguite.Ciò mette in evidenza l’importanza della Public Choice, la cui analisi delle interazioni politico-economiche è tuttavia ancora inadeguata per una utilizzazione nell’ambito della teoria macroeconomica, soprattutto per quanto riguarda il ruolo dei gruppi d’interesse, che soltanto di recente, attraverso la teoria del « rent-seeking » di Gordon Tullock, vengono considerati nei modelli che tengono conto dei meccanismi politici.
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Pedrosa, Ítalo, and Maryse Farhi. "Macroeconomic theory in the aftermath of the crisis: mainstream and new Keynesianism." Nova Economia 25, no. 2 (August 2015): 237–60. http://dx.doi.org/10.1590/0103-6351/1737.
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Abstract: The failure of mainstream macroeconomics to provide a suitable set of instruments to understand and fight against the economic crisis has triggered a debate among the dominant theoretical tendency, on its own foundations and on the macroeconomic policy that should be implemented after the crisis. The aim of this paper is to investigate to what extent the crisis affected mainstream macroeconomic theory and policy guidelines. We argue that new Keynesians did not pass unharmed by the crisis, themselvesacknowledging the need to adapt their models through the incorporation of new variables and ideas. The main change is the recognition of the non-neutrality of the financial system, which calls into question monetary policy guided by one instrument, the short-term interest rate, and by one target, the inflation rate, which would be insufficient to simultaneously lead to a stable and near potential output growth whilemaintainingthe stability of the financial system.
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Artamonov, N. V., D. V. Artamonov, and V. A. Artamonov. "Credit Cycles: Econometric Analysis and Evidence for Russia." MGIMO Review of International Relations, no. 2(35) (April 28, 2014): 113–22. http://dx.doi.org/10.24833/2071-8160-2014-2-35-113-122.
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One of the principal problem in contemporary macroeconomics is concerned with factors increasing or decreasing economic dynamics. The mainstream approach is based on neoclassical assumptions, but recently new approaches appear mostly based on new Keynesian concepts. In present time the influence of monetary market and credit instruments become more and more significant. Credit resources of banking and financial structures can affect and distort to reallocation of resources for national and even for global economic. In present paper an empiric and econometric analysis for some macroeconometric and monetary indices for Russian Federation is done. An econometrical models describing the influence of credit variables onto real GDP is estimated. It is shown that in short-term periods changes in credit variables do influence significantly onto GDP. It is shown that on short-term periods changes in money aggregate M2 brings influence (through credit variables) onto national output. As well it is shown that changes in short-term interest rate brings significant negative influence onto real output. Impulse response functions for GDP on shocks of credit variables, monetary base and short-term interest rate are evaluated. For the present study of credit cycles and their impact to real business cycles statistical data (quarterly time series) on the following factors for Russian Federation are collected: nominal and real GDP, monetary base M2, short-term interest rate, long-term interest rate (10-year treasuries bill rate), total debt outstanding. All time series are seasonally adjusted and collected for the period 2004 Q1 - 2013 Q2. All interest rates are adjusted for inflation (i.e. we deal with real interest rates). The investigation of long-term relationship for the factors under consideration are based on integration. It is important to note that in the present paper all econometric models are estimated on "pure" statistical data, while in many research papers on business and credit cycles all evaluations and inferences are based on "filtered" time series (mostly filtered by Hodrick-Prescott's method). In present paper "causality" always means "Granger causality". All estimations are made in gretl, an open-source multiplatform econometric software.
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Grasselli, Matheus R. "Book review: Carl Chiarella, Peter Flaschel and Willi Semmler, Reconstructing Keynesian Macroeconomics (Volume 1: Partial Perspectives, 2012, 400 pp.; Volume 2: Integrated Approaches, 2013, 512 pp.; Volume 3: Macroeconomic Activity, Banking and Financial Markets, 2015, 390 pp.; Routledge, Abingdon, UK and New York, NY, USA)." Review of Keynesian Economics 5, no. 3 (July 2017): 481–88. http://dx.doi.org/10.4337/roke.2017.03.08.
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CLIFT, BEN, and JIM TOMLINSON. "Credible Keynesianism? New Labour Macroeconomic Policy and the Political Economy of Coarse Tuning." British Journal of Political Science 37, no. 1 (December 13, 2006): 47–69. http://dx.doi.org/10.1017/s0007123407000038.
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This article questions prevailing interpretations of New Labour's political economy and challenges the assumption within the comparative and international political economy literatures of the exhaustion of the Keynesian political economic paradigm. New Labour's doctrinal statements are analysed to establish to what extent these doctrinal positions involve a repudiation of Keynesianism. Although New Labour has explicitly renounced the ‘fine tuning’ often (somewhat problematically) associated with post-war Keynesian political economy, we argue that they have carved out policy space in which to engage in macroeconomic ‘coarse tuning’ inspired by Keynesian thinking. This capacity to ‘coarse tune’ is precisely what is being sought in New Labour's quest for credibility through the redesign of British macroeconomic policy framework and institutions. Our empirical focus on New Labour in government since 1997 offers considerable evidence that this search for the capacity to ‘coarse tune’ has been successful.