Post Keynesian economics
Subtitle: debt, distribution, and the macro economy
By: Thomas I. Palley.
Publisher: Macmillan Press; St. Martin's Press
Published: 1996
Place of publication: Houndmills, Basingstoke, Hampshire; New York
Language: eng
Number of pages: 239
Subjects: Keynesian economics.; Supply and demand -- Mathematical models.; Macroeconomics.
Description: This book provides a novel statement of Post Keynesian macroeconomic theory that synthesizes three strains of such theory associated with Yale (Tobin) Keynesianism, Cambridge, UK (Kaldor) Keynesianism, and American (Davidson, Minsky) Post Keynesianism. The book focuses on the significance of privately created inside debt and income distribution for the determination of economic activity.

The existence of inside debt means that "nominal" wage reductions cause redistributions of wealth that can reduce aggregate demand, while the effect of income distribution on aggregate demand means that "real" wage reductions also reduce aggregate demand. Consequently, neither nominal wage flexibility nor real wage flexibility can ensure full employment in a monetary economy. The book then explores how money and inside debt are created by the normal workings of the financial system.

Fluctuations in the level of debt service burdens give rise to fluctuations in aggregate demand which can then cause business cycles.
Notes: Includes bibliographical references (p. 222-231) and indexes.