Economic Growth and Macroeconomic Stabilization Policies in Post-Keynesian Economics
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Economic Growth and Macroeconomic Stabilization Policies in Post-Keynesian Economics

Edited by Hassan Bougrine and Louis-Philippe Rochon

Hassan Bougrine, Louis-Philippe Rochon and the expert contributors to this book explore issues of economic growth and full employment; presenting a clear explanation to stagnation, recessions and crises, including the latest Global Financial Crisis of 2007-8. With a central focus on the role played by government spending, deficits and debt as well as the setting of interest rates, the chapters propose alternative policies that can be used by central banks and fiscal authorities to deal with problems of income inequality, unemployment and slow productivity.
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Chapter 6: Secular stagnation, loanable funds and demography: why the zero lower bound is not the problem

Servaas Storm

Abstract

The prolific writings of Marc Lavoie and Mario Seccareccia include outstanding contributions to Keynesian macroeconomics, macro modelling, the analysis of fiscal and monetary policymaking, theories of (endogenous) money and credit, and political economy in general. One thread that runs through their papers and books over their long and distinguished careers is a critical examination of conventional neoclassical or ‘New Consensus’ economics, often with a particular focus on its approach to money and interest rates. This chapter takes up this thread and focuses on the revival of the Wicksellian loanable funds model in the (policy) discussions on the secular stagnation of the advanced economies, in particular of the US. Mario Seccareccia and Marc Lavoie have consistently argued against the relevance of this model for a monetary production economy, and this chapter, which acknowledges the cogency, clarity and power of their analyses, puts forward the main criticisms of the loanable funds argument in six points.

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