Shareholders have increased their ability to influence management decisions significantly over the past two decades. This paper proposes an extension of the Post Keynesian theory of the firm proposed by Lavoie (1992) to analyze the effects of this change in shareholder power on investment...

The financial crisis can be explained as the ultimate result of the gradual move towards neoliberal policies and the acceptance of neoliberal economic theories. The purchasing power of ordinary workers and consumers has been constrained by the evolution of six economic features: environmental...

Modern governments with a floating currency face no inherent financial constraints. Unfortunately, most modern macro-theorists continue to write as if these nations were financially constrained by (1) the magnitude of current tax "revenue" and (2) the private sector's willingness to "finance"...

This paper engages the last testimony of the Chairman of the Federal Reserve System, Alan Greenspan, before a joint session of Congress in July 2005. It identifies nine areas we relate to the arguments of John Kenneth Galbraith, summarized in his recent contribution, The Economics of Innocent...

From the "new consensus in macroeconomics" (NCM) framework, this paper derives a different set of policy proposals. The NCM has become associated with the use of interest rate policy to target inflation and to reach a zero output gap, and to ignore fiscal policy. This paper argues that interest...

This paper explores the macroeconomic consequences of interactions between fiscal and monetary policy, in an environment characterized by endogenous money in which the interest rate is set exogenously by the central bank. Three "benchmark" interest rate operating procedures are identified, none...

In the debate on monetary policy strategies on the two sides of the Atlantic, it is now almost commonplace to contrast the Fed and the European Central Bank (ECB) by pointing out the flexibility and capacity to adjust of the former and the rigidity and extreme caution of the latter, and its...

This comment provides a simple analytical exposition of the model used by Godley and Lavoie (2007a) to argue a case for fiscal stabilization policy. I show that the government-spending stabilization rule they propose ensures budget solvency as long as private-sector saving behavior is stable. If...

The present article offers a fundamental critique of fiscal policy as it is understood in theory and exercised in practice. Two specific demand-side stabilization methods are examined here: conventional pump priming and the new designation of fiscal policy effectiveness found in the new...