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.
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.
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.
Michelle Baddeley and Giuseppe Fontana
Giuseppe Fontana, Claude Gnos and Achim Truger
The »New Monetary Policy« (NMP) is the major stabilisation policy associated with the so-called »New Consensus« (NC) view in macroeconomics. NC is the dominant view in modern mainstream economics. Its major tenets are (1) the supply-side determined equilibrium level of unemployment (e.g. NAIRU), and, related to it, (2) the acceptance of the long-run Phillips curve. Within this classical framework, the NC has first explored and then supported a role for short-run effective stabilisation policies, which have usually meant aggregate demand fine-tuning via changes in the short-run nominal interest rate controlled by the central bank. The contributions to this special issue, which contains some of the papers presented at the workshop on Macroeconomics and Macroeconomic Policy organized by the Research Network Alternative Macroeconomic Policies (Germany), the Post Keynesian Economic Study Group (UK), and the Association pour le Développement des Études Keynésiennes (France) on 28th and 29th October 2005 in Berlin, discuss this NC view and its NMP implications from a variety of perspectives and economic traditions.