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Contemporary Post Keynesian Analysis

Edited by L. Randall Wray and Mathew Forstater

Original articles by leading scholars of post Keynesian economics make up this authoritative collection. Current topics of the greatest interest are covered, such as: perspectives on current economic policy; post Keynesian approaches to monetary theory and policy; economic development, growth and inflation; Kaleckian perspectives on distribution; economic methodology; and history of heterodox economic theory. The contributors explore a variety of prevailing issues including: wage bargaining and monetary policy in the EMU; the meaning of money in the internet age; stability conditions for small open economies; and economic policies of sustainable development in countries transitioning to a market economy. Other enduring matters are examined through the lens of economic theorists – Kaleckian dynamics and evolutionary life cycles; a comparison between Keynes’s and Hayek’s economic theories; and an analysis of the power of the firm based on the work of Joan Robinson, to name a few.
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Chapter 16: Presenting ‘Demi-Regularities’ of Pricing Behaviour: The Need for Triangulation

Paul Downward and Andrew Mearman


Paul Downward and Andrew Mearman INTRODUCTION This chapter addresses one of the most contentious issues in post Keynesian economics and in heterodox economics more widely: the use of econometric methods. Econometrics is of course a major tool in orthodox economics; however, heterodox economists have long viewed it with caution. For instance, Keynes (1973) and Kalecki (1964) both wrote specifically about the necessary conditions for the use of econometrics. Authors informed by the increasingly important philosophy of Critical Realism are also skeptical (see Lawson, 1997). However, post Keynesianism is somewhat ambivalent about econometrics. While there is suspicion, there is also prominent use of econometrics in certain areas – for instance, on money supply endogeneity (Pollin, 1991) – and more generally, Mitchell (1991). Paul Davidson’s work exemplifies this ambivalence: his own work implies many objections to econometrics, yet as editor of the Journal of Post Keynesian Economics, he publishes many articles that use econometrics. Sheila Dow (2002) advances a methodological pluralism, which entails the possible use of econometrics. Elsewhere, Downward (1999) and Downward and Mearman (2002a; 2002b) have argued that the use of econometrics is compatible with post Keynesianism and Critical Realism. This chapter aims to build on the methodological arguments of that work, which argued that econometrics could play a role as part of a strategy of methodological triangulation. The chapter illustrates this argument by presenting empirical work on pricing. The structure of the chapter is as follows. First, econometrics is defined. It is argued that econometrics inherently possesses descriptive...

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