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Peter Howitt

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Peter Howitt

Robert Clower (1926–2011) was an American economist who criticized both conventional general equilibrium theory and mainstream Keynesian theory for failing to provide a conceptually coherent account of the market mechanisms that coordinate the economic plans of different economic actors. He offered several suggestions for constructing such an account. The first was his “dual decision hypothesis”, according to which the failure of unemployed workers to execute their desired sales of labor-services constrains their consumption demands. In the 1970s and 1980s, this suggestion inspired a large literature on “general disequilibrium analysis”. The second was his “dichotomized budget constraint”, which took into account that an individual’s market demands were constrained by the individual’s ability to acquire cash. This suggestion led to the branch of modern theory known as “cash-in-advance”. Starting in the 1990s, he argued for “general process analysis”, which focused on market-making firms and used an agent-based methodology.

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Levine Aghion, Peter Howitt and Ross Levine

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Beyond DSGE Models: Toward an Empirically Based Macroeconomics

Essays on the Art and Craft of Economics

David Colander, Peter Howitt, Alan Kirman, Axel Leijonhufvud and Perry Mehrling