An Insider’s View on the Economics of Hyman Minsky
Chapter 9: The foundations of medium-run dynamics
This chapter tries to update the discussion on the state of the literature, which in Chapter 6 was centered upon the IS–LM model. At present, the debate on the nature of macroeconomics seems to be dominated by the presence of a substantial methodological similarity between the various paradigms. This similarity is centered around the maximizing role of agents in a dynamic environment, where the driving forces are exogenous shocks while the main mechanisms of transmission are based upon the concept of intertemporal substitution. This methodological monism is critically considered, and the foundations of different dynamics are put forward. They refer to a medium-run period, and are based upon disequilibrium where monetary and real aspects of both demand and supply aspects are taken into consideration.
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