On the (In-)stability and the Endogeneity of the Normal Rate of Capacity Utilization in a Post-Keynesian/Kaleckian ‘Monetary’ Distribution and Growth Model

Hein, Eckhard

doi:10.1057/9780230595606_17

Cited by 9 publications

(11 citation statements)

References 59 publications

(57 reference statements)

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“…8 See also Hein (2014b, Chapter 11) and Lavoie (2014, Chapter 6.5) for summaries of the debates. inflation targeting monetary policies when the interest cost and distribution channels of interest rate policies are considered (Hein 2006a.…”

Section: Endogenous Rate Of Capacity Utilisation Beyond the Short Run?mentioning

confidence: 99%

Post-Keynesian macroeconomics since the mid 1990s: main developments

Hein

2017

European Journal of Economics and Economic Policies: Intervention

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in AbstractIn this paper the main developments in post-Keynesian macroeconomics since the mid1990s will be reviewed. For this purpose the main differences between heterodox economics in general, including post-Keynesian economics, and orthodox economics will be reiterated and an overview over the strands of post-Keynesian economics, their commonalities and developments since the 1930s will be outlined. This will provide the grounds for touching upon three important areas of development and progress of postKeynesian macroeconomics since the mid-1990s: first, the integration of distribution issues and distributional conflict into short-and long-run macroeconomics, both in theoretical and in empirical/applied works; second, the integrated analysis of money, finance and macroeconomics and its application to changing institutional and historical circumstances, like the process of financialisation; and third, the development of full-blown macroeconomic models, providing alternatives to the mainstream 'New Consensus Model' (NCM), and allowing to derive a full macroeconomic policy mix as a more convincing alternative to the one implied and proposed by the mainstream NCM, which has desperately failed in the face of the recent crises.

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Section: Endogenous Rate Of Capacity Utilisation Beyond the Short Run?mentioning

confidence: 99%

Post-Keynesian macroeconomics since the mid 1990s: main developments

Hein

2017

European Journal of Economics and Economic Policies: Intervention

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“…Firms' assessment of trend growth and the normal rate of utilization may endogenously adjust to actual experience (Lavoie 1995a(Lavoie , 1996. And finally, the target or normal rate as a stable inflation rate of utilization may itself be endogenous to inflation targeting monetary policies when the interest cost and distribution channels of interest rate policies are considered (Hein 2006;2008, chapter 17).…”

Section: A Steindlian Model Of Distribution Growth and Stagnationmentioning

confidence: 99%

Secular Stagnation or Stagnation Policy? Steindl after Summers

Hein

2015

SSRN Journal

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The current debate on secular stagnation is suffering from some vagueness and several shortcomings. The same is true for the economic policy implications. Therefore, we provide an alternative view on stagnation tendencies based on Josef Steindl's contributions. In particular, Steindl (1952) can be viewed as a pioneering work in the area of stagnation in modern capitalism. We hold that this work is not prone to the problems detected in the current debate on secular stagnation: It does not rely on the dubious notion of an equilibrium real interest rate as the equilibrating force of saving and investment at full employment levels, in principle, with the adjustment process currently blocked by the unfeasibility of a very low or even negative equilibrium rate. It is based on the notion that modern capitalist economies are facing aggregate demand constraints, and that saving adjusts to investment through income growth and changes in capacity utilization in the long run. It allows for potential growth to become endogenous to actual demand-driven growth. And it seriously considers the role of institutions and power relationships for long-run growth-and for stagnation. JEL Classifications: B22, E11, E12, E65, O11 (1966), are completely ignored as well. 2 The same holds true for modern interpretations and applications of these approaches. This is a problem, because the theoretical foundations of modern secular stagnation debates are vague and can be challenged on several grounds. First, as is clear from the consensus proclaimed by Teulings and Baldwin (2014b) mentioned above, at the very foundations, even of the presumably more Keynesian work by Summers (2014aSummers ( , 2014bSummers ( , 2015, Krugman (2014), and others, in principle, we have an equilibrium real or natural rate of interest equalizing saving and investment in the capital market at full employment output levels, which, however, may not be feasible. This constellation is vulnerable to critique from the "Cambridge controversies in the theory of capital," questioning an interest rate-inverse and continuously downward sloping capital demand curve in a more-than-one-good

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“…Theoretically, they are very close to the idea embedded in the standard NAIRU models: There is a long-run equilibrium, determined by structural characteristics of the labour market, which is independent of the short-run fluctuations generated by demand shocks or macroeconomic policy. We do not share this view (Hein 2004(Hein , 2006a(Hein , 2006b period, therefore, it must be concluded that fiscal policy in the USA has played its macroeconomic stabilisation role properly, whereas in the Euro area fiscal policy has acted in an often pro-cylical and therefore destabilising way For the individual Euro area countries the picture is rather diverse (Table 5) …”

Section: The Macroeconomic Impact Of Fiscal Policymentioning

confidence: 85%

“…5 The ECB has tended to tighten whenever inflation increased above the target without relaxing when inflation expectations came down. For a general critique of the ECB's 'anti-growth bias' see Bibow (2002Bibow ( , 2005aBibow ( , 2005b Hein (2002) and Hein/Truger (2006b Hein (2006aHein ( , 2006b) for the integration of real debt effects into Kaleckian models of distribution and growth with conflict inflation.…”

Section: The Macroeconomic Impact Of Monetary Policy and Wage Developmentioning

confidence: 99%

Fiscal Policy and Macroeconomic Performance in the Euro Area: Lessons for the Future

Hein¹,

Truger²

2007

Euroland and the World Economy

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in AbstractSince the start of the European Monetary Union fiscal policy in the Euro area has been dominated by the Stability and Growth Pact (SGP). Quite obviously the SGP has been unsuccessful in fulfilling its goals, fiscal sustainability and supporting economic growth. More and more countries have exceeded the 3 percent of GDP limit for the budget deficit, while at the same time macroeconomic performance has been unsatisfactory. We analyse fiscal policy and its macroeconomic impact for the Euro area as a whole and for selected countries and compare it with US fiscal policy, with a special emphasis on the period 2001-2005. Whereas US fiscal policy has been strongly counter-cyclical, thus stabilising the economy, in the Euro area fiscal policy has been much more restrictive and has had procyclical and therefore destabilising effects for many countries. However, one cannot put all the blame on fiscal policy. The ECB's restrictive monetary policy and divergent and destabilising wage developments across the Euro area are at least as important as fiscal policy in the explanation of the Euro area's weak economic performance. As a possible solution for the future, we suggest to replace the SGP by expenditure paths as coordination tool, and we discuss an important modification of the concept. Such expenditure paths could co-ordinate fiscal policies across the Euro area in a counter-cyclical way and at the same time ensure fiscal sustainability. Unfortunately, as long as monetary and wage policies remain uncoordinated and destabilising, any improvements in fiscal policy will not be very effective in enhancing economic performance.JEL-Code: E 62, E 63, E 65, E 61.

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On the (In-)stability and the Endogeneity of the Normal Rate of Capacity Utilization in a Post-Keynesian/Kaleckian ‘Monetary’ Distribution and Growth Model

Abstract: http://www.imk-boeckler.de On the (in-)stability and the endogeneity of the 'normal' rate of capacity utilisation in a post-Keynesian/Kaleckian 'monetary' distribution and growth model

Cited by 9 publications

References 59 publications

Post-Keynesian macroeconomics since the mid 1990s: main developments

Post-Keynesian macroeconomics since the mid 1990s: main developments

Secular Stagnation or Stagnation Policy? Steindl after Summers

Fiscal Policy and Macroeconomic Performance in the Euro Area: Lessons for the Future

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