Money, Financial Instability and Stabilization Policy

Money, Financial Instability and Stabilization Policy

Edited by L. Randall Wray

Money, Financial Instability and Stabilization Policy consists of original articles by leading Post Keynesians, Kaleckians and other heterodox economists from the developed and developing world. Post Keynesian literature has long been associated with the study of money, financial markets and financial instability. Indeed, this is perhaps the area to which Post Keynesians have made the greatest contributions. The authors to this volume present an overview of the latest research on monetary theory and policy, financial markets, and financial instability coming out of the Post Keynesian school of thought. They provide an indication of the wide-ranging interests and of the truly international scope of Post Keynesian research. The first half of the volume is theoretical, while the second half includes papers that are either empirical or more focused on specific concerns.

Introduction

Edited by L. Randall Wray

Subjects: development studies, development economics, economics and finance, development economics, post-keynesian economics

Extract

L. Randall Wray and Mathew Forstater Post Keynesian literature has long been associated with the study of money, financial markets, and financial instability. Indeed, this is perhaps the area to which Post Keynesians have made the greatest contributions. Paul Davidson’s Money and the Real World revived interest in Keynes’s contributions to mon etary theory, putting money back into ‘Keynesian’ economics. Indeed, it is ironic that most of the post-war research associated with Keynes’s name (whether of the neoclassical synthesis orthodoxy or even of the Cambridge heterodoxy) relegated the role of money to the background. Davidson emphasized the ‘Chapter 17’ version of Keynes, in which money plays a crucial role in the economy owing to its peculiar characteristics and to the nature of decision making in conditions of uncertainty. This was, of course, the theme of contemporaneous work by Jan Kregel, who contrasted Keynes’s methodology (‘shifting equilibrium’) to that of orthodoxy. Since the early 1980s, there have been major advances made to the Post Keynesian approach to money, in particular the development of Basil Moore’s horizontalism, the refinement of the Italian–French circuit approach, and the revival of the Knapp–Keynes chartalist approach. Many of the papers collected here draw on these traditions in the Post Keynesian literature to inform their thinking on money and monetary policy. In particular, the paper by Thabet as well as the paper by Springler, concern recent Post Keynesian approaches to money. The economist whose name is most intimately associated with the Post Keynesian focus on...