Post Keynesian Approach

Post-Keynesian Approach

1. Presentation of Economics

2. Post Keynesian Approach

3. Content Introduction Characteristics of Post Keynesian Economics Strands of PKE The Post Keynesian Theory of Income Distribution in the Corporate Economy Post Keynesian Employment Analysis References

4. What is post Keynesian Economics ? The term "post-Keynesian" was first used to refer to a distinct school of economic thought by  Eichner  and Kregel (1975) The   Post Keynesian approach  to economic growth is shown to focus on the expansion of aggregate demand, with a distinctive  approach  to monetary, fiscal and other dimensions of macroeconomic policy .

5. CHARACTERISTICS OF POST-KEYNESIAN ECONOMICS Effective demand The economy is demand-determined both in the short run and the long run ; supply adapts to demand. At all times, it is investment that determines saving, rather than the converse. Historical and dynamics We must always consider the transition from one time position to another, and recognize that the conditions under which this transition occurs may affect the final position of equilibrium. The possible negative of flexible Because of income effects, price flexibility may worsen impact the situation that it was meant to correct. The monetary production economy Models must recognize that contracts are denominated in money; that firms have debts and households have assets that may impose considerable financial constraints. Fundamental Uncertainty The future is necessarily different from the past. The future is unknown and unknowable since decisions taken today will alter the way the future looks.     Relevant and contemporary microeconomics Post-Keynesian microeconomics rests on decisions of a lexicographic nature and on inversed L-shaped cost curves. Pluralism of theories and methods Reality can take several forms. As such, there are a number of different methods as well as economy theories that may appear to rival one.

6. CHARACTERISTICS OF POST-KEYNESIAN ECONOMICS Relevant and contemporary microeconomics Post-Keynesian microeconomics rests on decisions of a lexicographic nature and on inversed L-shaped cost curves. Pluralism of theories and methods Reality can take several forms. As such, there are a number of different methods as well as economy theories that may appear to rival one.

7. STRANDS OF PKT : There are a number of strands to post-Keynesian theory with different emphases. Joan Robinson regarded Michał Kalecki’s theory of effective demand to be superior to Keynes’ theories. Kalecki's theory is based on a class division between workers and capitalists and imperfect competition.  Robinson also led the critique of the use of aggregate production functions based on homogeneous capital – the  Cambridge capital controversy  – winning the argument but not the battle. 

8. THE POST KEYNESIAN THEORY OF INCOME DISTRIBUTION IN THE CORPORATE ECONOMY The post Keynesian theory of income distribution in the corporate economy was developed in the 1950s and 1960s by Robinson, Nicholas Kaldor, Liugi Pasinetti, and other Cambridge economists . These writers , Kaldor and Pasinetti developed the clearest formal expressions of the theory, formations which enables them to derive results which were found to be surprising by more post Keynesian economics. The conclusions of this theory has 6 sections shows different concerns: Developed a model of post Keynesian economics in first section In second section model is used to show the relationships among a variety of post keynesian model especially those of Kaldor and Pasinetti In third section, model used to generalized the economy with corporation and stock exchange the pasinetti results that distribution determined by capitalist’ but not worker’s saving

9. THE POST KEYNESIAN THEORY OF INCOME DISTRIBUTION IN THE CORPORATE ECONOMY 4. The section four shows that Kaldor’s claim have to generalized the pasinetti results is false although the expression for which he made that claim is correctly derived and useful. 5. Section five is concerned with direction of economic causation implied by the various post Keynesian models. 6. In section six, some purely formal aspects of the general post Keynesian are considered and analytical.

10. POST KEYNESIAN EMPLOYMENT ANALYSIS The post Keynesian theory is derived from the chapter “THE PRINCIPLES OF EFFECTIVE DEMAND” where labour-hire demand is derived from an effective demand point determined in the product markets. The effective demand principle means that there is an “employment function” relating alternate labour-hire decisions to alternate points of effective demand. There is no aggregate demand for labour schedule with the real wage the independent variable.