Popper recognizes that there are, at least, two versions of his 'Rationality Principle' (RP) yet he does not explain either how they relate to other parts of his works or which version social scientists should adopt. We argue that Popper's formulation of RP can be upgraded by explicitly...

The creation of the Economic and Monetary Union (EMU) has not brought significant gains to the Portuguese economy in terms of real convergence with wealthier eurozone countries. We analyze the causes of the under-performance of the Portuguese economy in the last decade, discuss its growth...

The rational expectations hypothesis (REH) is the standard approach to expectations formation in macroeconomics. We discuss its compatibility with two strands of Karl Popper's philosophy: his theory of knowledge and learning, and his "rationality principle" (RP). First, we show that the REH is...

A central tenet of the so-called new consensus view in macroeconomics is that there is no long-run trade-off between inflation and unemployment. The main policy implication of this principle is that all monetary policy can aim for is (modest) short-run output stabilization and long-run price...

We analyse the dynamic behaviour of an economy where the central bank (CB) sets interest rates according to a Taylor-type policy rule. A simple model for a closed and instability-prone economy is constructed and subjected to formal dynamical analysis and numerical simulation. It is shown that a...

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...

A central tenet of the so-called new consensus view in macroeconomics is that there is no long-run trade-off between inflation and unemployment. The main policy implication of this principle is that all monetary policy can aim for is (modest) short-run output stabilization and long-run price...

We present a simple theoretical framework that integrates the notion of the natural or neutral interest rate, liquidity preference theory, and the monetary policy practice by modern central banks. We claim that this theory explains the conditions under which an economy will experience an...

The purpose of this paper is to examine the proposition that capital stock relative to aggregate output has been an important variable in the determination of the U.S. NAIRU (Non-Accelerating Inflation Rate of Unemployment) over the last four decades. We present new empirical evidence, obtained...

A central tenet of the so-called new consensus view in macroeconomics is that there is no long-run trade-off between inflation and unemployment. The main policy implication of this principle is that all monetary policy can aim for is (modest) short-run output stabilization and long-run price...