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Giuseppe Fontana

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Giuseppe Fontana

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Giuseppe Fontana

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Giuseppe Fontana

This chapter reviews the controversial issues debated by horizontalist and structuralist analyses of endogenous money with the help of an original four-panel diagram. This is instrumental to move beyond a dualistic view of endogenous money, by presenting in a simple and concise way the nature and origin of the differences between horizontalists and structuralists. The chapter also explains how to encompass the horizontalist and structuralist analyses in a general theory of endogenous money. Building on the work of Hicks, the horizontalist and structuralist analyses are interpreted in light of an original time framework grounded in the distinction between a single-period analysis and a continuation analysis.

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Giuseppe Fontana

The last few decades have witnessed a degree of consensus in macroeconomics unprecedented since the Neoclassical Synthesis of the 1950s–1970s. As argued by several commentators, the focus in macroeconomics has now moved from a polemical ‘schools of thought’ debate to a new synthesis, which explicitly draws on a rich variety of previous contributions. This New Consensus Macroeconomics (NCM) view has several features: monetary policy replaces fiscal policy as the main stabilisation policy; price stability, which for all practical purposes means a constant inflation rate around 2 per cent, is the primary objective of monetary policy; this implicit or explicit inflation target can be controlled through interest rate-management policies by the monetary authority of the country; and finally there is no long-run trade-off between inflation and unemployment (e.g. Clarida et al., 1999; see, for a critical assessment of the NCM, Arestis, 2009; Lavoie, 2009; Kriesler and Lavoie, 2007). The purpose of this chapter is to critically assess the New Consensus Macroeconomics (NCM) theory and its policy implications in light of the work of John Kenneth Galbraith. The chapter is organised as follows. The next section presents the New Consensus Macroeconomics view together with its monetary policy implications. The subsequent two sections then discuss the views of John Kenneth Galbraith on macroeconomics theory and policies, and social imbalances in modern economies, respectively. The final section concludes.

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Giuseppe Fontana

One of the greatest achievements of the modern ›New Consensus‹ view in macroeconomics is the assertion of a non-quantity-theoretic approach to monetary policy. Leading theoricians and practitioners of this view have indeed rejected the quantity theory of money, and defended a return to the old Wicksellian idea of eliminating high levels of inflation by adjusting nominal interest rates to changes in the price level. This paper evaluates these recent developments in the theory and practice of monetary policy in terms of two basic questions, namely what is the monetary policy instrument controlled by the central bank, and which macroeconomic variables are affected in the short and long run by monetary policy.

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Giuseppe Fontana

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Giuseppe Fontana and Malcolm Sawyer

This paper outlines an approach to ecological macroeconomics based on post-Keynesian and Kaleckian ideas. It views growth as demand-driven through investment, and focuses on the conflicts between that demand-driven growth rate, the growth of the effective labour force and the ‘nature constrained’ rate of growth. The paper argues that there will not be ‘market forces’ which will address those conflicts, and specifically to bring growth to an environmentally sustainable growth rate. The policy agenda which is suggested is wide ranging and it calls for appropriate fiscal policy and budget deficits.

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Michelle Baddeley and Giuseppe Fontana