Post-Keynesian Economics

Post-Keynesian Economics

New Foundations

Marc Lavoie

The book is a considerably extended and fully revamped edition of the highly successful and frequently cited Foundations of Post-Keynesian Economic Analysis, published in 1992. It provides an exhaustive account of post-Keynesian economics and of the developments that have occurred in post-Keynesian theory and in the world economy over the last twenty years. Topics covered include open-economy issues, the methodological foundations of heterodox economics, consumer theory, firms and pricing, money and credit, effective demand and employment, inflation theory, and growth theories.

Chapter 4: Credit, money and central banks

Marc Lavoie

Subjects: economics and finance, post-keynesian economics


We now enter macroeconomics. It may seem bizarre to start off by dealing with the topic of credit and money. Students who receive instruction in orthodox economics are used to tackling money as an afterthought, once all the real phenomena have been taken care of. The ordering of topics proposed here is nonetheless perfectly legitimate. The principle of effective demand, which is an essential feature of post-Keynesian economics, with causality running from investment to saving, is best understood within the context of a macroeconomic explanation of a monetary production economy

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