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Monthly Archives: May 2014
Is the Speculative or the Precautionary Demand for Money More Important in Real World Capital Markets?
In Keynes’ General Theory is is famously stated that the demand for money relies on three distinct functions. These are: the transactions demand for money; the precautionary demand for money; and the speculative demand for money. Or, more formally: M … Continue reading
How Do Changes in Interest Rates Affect the Level of Economic Activity?
Roy Harrod has some rather interesting opinions on the effectiveness of interest rates. As readers of this blog know I am rather skeptical of using interest rates to steer the economy. Basically this is because I think that using them … Continue reading
Posted in Economic Policy, Economic Theory
46 Comments
Is There Really No Labour Market in Keynesian Theory?
It was recently said by James Galbraith that a model that includes a labour market is “anti-Keynesian”. This caused a little bit of fuss but I thought that it was a very good first approximation of what Keynes’ economics in … Continue reading
Posted in Economic Theory
36 Comments
A Brief History of the Bank of England’s Endogenous Money Policies: An Ode to Roy Harrod
Roy Harrod, usually remembered today for his part in the development of the Harrod-Domar growth model was also, so far as I can see, the most sophisticated monetary economist among the early Post-Keynesians. His book Money, designed as a sort … Continue reading
Posted in Economic History, Economic Theory
16 Comments
Exploring Inequality: Real Wages and Productivity Growth
I recently had an argument with a few New Keynesian types in the comments section of Lars Syll’s blog. I won’t get into the nuances here as they are not very interesting. Basically the New Keynesians were trying to defend … Continue reading
Posted in Economic History, Economic Policy, Economic Theory
120 Comments
Why Sraffa’s Theory Does Not Contain a Labour Theory of Value
In my last post I tried to argue that, for a number of reason, once we make additions to Sraffa’s theory to make it comprehensive enough to confront the real world any potential interpretation of the theory in line with … Continue reading
Posted in Economic Theory
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A Theory of Consumption and Speculation to Round Out Sraffa’s Theory of Production
The other day I discussed the fundamental differences between the Sraffian and the marginalist systems. Since then I was perusing Sraffa’s Production of Commodities By Means of Commodities (full PDF available here). It’s a very nice piece of work. Tightly … Continue reading
Posted in Economic Theory
14 Comments
Judge, Jury and Executioner: More Moralistic Cant From the High Priests of the Austrian School
Well, the money cranks have weighed in on my last article on the gold standard. The response, which didn’t actually link to my piece as is customary in such debates (does my interlocutor not wish that his readers might read … Continue reading
Posted in Economic Theory
2 Comments
Why the Value of Contemporary Money is Not Dependent on the Value of Gold
I note that there is oftentimes confusion today when the gold standard era is brought up. The reason for the confusion when discussing this era is because the monetary system functioned in an entirely different way. The confusion goes two … Continue reading
Posted in Economic History, Economic Theory
7 Comments
Why Economists Fail to Make ‘Rational’ Judgments and Why You Should Too
Recently Cameron Murray directed me to an interesting paper entitled Do Economists Recognize an Opportunity Cost When They See One? A Dismal Performance from the Dismal Science. The paper surveyed a whole bunch of professional economists to see if they … Continue reading
Posted in Economic Theory, Psychology
46 Comments
Fixing the Economists 