The paper shows that the "monetary policy rules and inflation targeting" literature and the "endogenous money" literature share a reaction function approach to central banking policy. Monetary aggregates are the outcome of the price-maker and quantity-taker behavior of central banks in the...

This paper discusses the current 'new consensus' view on monetary policy and the theoretical framework on which that practical view relies, namely, the 'targets-and-instrument approach'. We argue that in the modern world of financial innovation and liability management central banks cannot...

We compare the “New Consensus” (NC) in macroeconomics as expounded in Woodford (2003) and the Post-Keynesian (PK) approach regarding the causes of a “liquidity trap” (LT). We argue that in the NC approach a LT is a phenomenon caused by unusually large transitory shocks that depress the...

This paper addresses the effects on employment and the price level of a range of factors including capital accumulation, technical progress and money wage changes by formalising the aggregate supply and demand framework posited by Keynes in his General Theory. We find that labour-augmenting...

The main purpose of this study is to explore the potential expansionary effect stemming from the monetization of debt. We develop a simple macroeconomic model with Keynesian features and four sectors: creditor and debtor households, businesses, and the public sector. We show that such...

David Romer has proposed a new basic macroeconomic framework: the IS--MP--IA model. Its proponents claim that it represents the 'modern' view of macroeconomics. We show that the new framework remains closely attached to the neoclassical synthesis and, in addition, does not take account of: (i)...