A Post-Keynesian Approach to Monetary Theory

Moore, Basil J.
September 1978
Challenge (05775132);Sep/Oct78, Vol. 21 Issue 4, p44
The post-Keynesian approach to monetary theory emphasizes that the size of the money stock is dependent on the need of central bankers to validate the growth of money wages. It also stresses the in dependence of investment from savings decisions. There is as yet no formal post-Keynesian theory of money that would correspond to the orthodox Keynesian or monetarist views on the subject. The consensus, such as it exists, is primarily negative rather than positive. However, by noting those key features of the prevailing orthodoxy which are explicitly rejected by the as yet relatively small group of post-Keynesian economists, it is possible to outline the distinguishing features of an alternative approach to monetary theory. These features include the serious recognition of historical time, with its implications for the rejection of general equilibrium analysis, the centrality of finance for investment behavior, the unique role of labor markets in the price determination process and the endogeneity of the money stock resulting from the need of central banks to validate the rate of growth of money wages.


Related Articles

  • New Keynesian Open-Economy Models and Their Implications for Monetary Policy. Bowman, David; Doyle, Brian // Working Papers -- U.S. Federal Reserve Board's International Fin;2003, p1 

    The considerable amount of research in recent years on New Keynesian, open-economy models — models with nominal price rigidities and intertemporally maximizing agents — has yielded fresh insights for what Alan Blinder has called the ‘dark art’ of making monetary...

  • CREDIT RATIONING AND EFFECTIVE SUPPLY FAILURES. Blinder, Alan S. // Economic Journal;Jun87, Vol. 97 Issue 386, p327 

    Hence this paper develops an explanation for how central bank policy affects real economic activity that has nothing to do with money. Instead, credit rationing is the operative mechanism. In order to make the credit-rationing mechanism stand out in bold relief, most other channels of monetary...

  • Policy Implications of the New Keynesian Phillips Curve. Schmitt-Groh�, Stephanie; Uribe, Mart�n // Economic Quarterly (10697225);Fall2008, Vol. 94 Issue 4, p435 

    The article examines on the optimal monetary policy implications concerning the developments of the New Keynesian Phillips curve. It notes that optimal monetary policy is characterized by near price stability which implies the transactions on the demand for money. It found out that the product...

  • FINANCIAL INTERMEDIARIES AND MONETARY CONTROLS. Smith, Warren L. // Quarterly Journal of Economics;Nov59, Vol. 73 Issue 4, p533 

    The article analyzes the role of non-bank financial intermediaries in the financial structure of the economy, its relation to the commercial banking system and the impact of its growth on the monetary policy. The recent arguments of the studies about the similarities of financial intermediaries...

  • MONETARY THEORY AND MONETARY POLICY A CENTRAL BANKER'S VIEW. Zijlstra, J. // De Economist (0013-063X);Apr1979, Vol. 127 Issue 1, p3 

    In this article attention is paid to monetary theory, the relationship between the instruments of monetary policy and other important macro-economic policy instruments, and finally to the real possibilities of pursuing an effective monetary policy. The conclusion from the theoretical analysis is...

  • Islamic Banks and Monetary Transmission Mechanism in Malaysia. Majid, M. Shabri Abd.; Hasin, Zamrah // Journal of Economic Cooperation & Development;2014, Vol. 35 Issue 2, p137 

    Monetary policy influences the real economy through various channels including the bank lending. Currently, Malaysia is operating under dual banking systems; conventional and Islamic banking. The latter has distinctive feature of interest-free. Hence, this study aims to empirically explore the...

  • Central Bank Accountability - Reevaluation and Perspectives. Cornel, Dumiter Florin; Luminiţa, Păiușan; Florin, Șoim Horaţiu // Ovidius University Annals, Series Economic Sciences;2012, Vol. 12 Issue 1, p1392 

    The economic literature regarding central banking and monetary policy suggest that the response of a standard monetary policy as a response to an inflationary bias, caused by a discretionary monetary policy represents the delegation of a monetary policy to an independent institution, which is...

  • Why money matters: Wicksell, Keynes, and the new consensus view on monetary policy. Fontana, Giuseppe // Journal of Post Keynesian Economics;Fall2007, Vol. 30 Issue 1, p43 

    One of the greatest achievements of the modern mainstream approach to monetary policy is to have rejected the old quantity-theoretic framework, and to have replaced it with a Wicksellian two-interest-rate analysis, which closely reflects the actual behavior of central banks around the world....

  • Estimating the natural rates in a simple New Keynesian framework. Bjørnland, Hilde C.; Leitemo, Kai; Maih, Junior // Empirical Economics;May2011, Vol. 40 Issue 3, p755 

    The time-varying natural rate of interest and output and the implied medium-term inflation target for the US economy are estimated over the period 1983-2005. The estimation is conducted within the New Keynesian framework using Bayesian and Kalman-filter estimation techniques. With the...


Read the Article


Sorry, but this item is not currently available from your library.

Try another library?
Sign out of this library

Other Topics