A simple model illustrates interactions between the 'primary' fiscal deficit (total deficit minus interest payments), economic growth and debt. The deficit/income ratio responds countercyclically to growth while growth may respond positively (a 'Keynes' case) or negatively (à la 'Merkel') to...

Wynne Godley has made enormous contributions to macroeconomic modelling. They are reviewed here in connection with his recent book with Marc Lavoie, Monetary Economics: An Integrated Approach to Credit, Money, Income, Production, and Wealth. Copyright The Author 2008. Published by Oxford...

External financial crises are not caused by an alert private sector taking advantage of the public sector's foolish actions such as running an unsustainable fiscal deficit or creating moral hazards. They are better described as private sectors (both domestic and foreign) acting to make...

Luigi Pasinetti's contributions to economics cover an enormous range of topics. This review article concentrates on growth accounting in his 'natural system' and his models of post-Keynesian growth and distribution. The natural system is restated in terms of social accounting matrices and its...

With full stock/flow accounting respected, the two-country open economy portfolio balance model has just two independent equations for asset market clearing. It can determine home and foreign interest rates but not the exchange rate. If asset market equilibria vary smoothly over time, the...