We empirically examine the relationship between U.S. output and household debt. To account for structural change due to financial liberalization, we divide the sample at the fourth quarter of 1982. We find structural differences between earlier and later business cycles for the U.S. household...

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...

This paper responds to Backhouse's (2004) claims that there is no antagonism between history and equilibrium and no case to be made in principle against equilibrium analysis. We first show that Backhouse's partial defense of equilibrium analysis has already been encompassed by heterodox theory....

A model of aggregate wage and price setting is developed that nests competing hypotheses concerning the role of worker' aspirations and bargaining power in the wage bargain. It is shown that although aspirations and bargaining power always affect inflation in the short run, there is disagreement...

This paper examines the compatibility of inflation targeting with an economy that is Post Keynesian in character. We show that in a Post Keynesian environment, policymakers can both set and achieve an inflation target without adverse consequences for the real economy, as long as an appropriate...

The purpose of this paper is to show that inflation targeting is compatible with Post Keynesian economics, but only if the policies used to achieve the inflation target explicitly acknowledge (1) the demand-determined nature of the real income generating process, and (2) the importance of...