Saturday, October 24, 2015

Roger Farmer — Demand Creates its Own Supply

I have been teaching basic Keynesian economics this week to my undergraduate class and I have just completed a new book manuscript with the working title of Prosperity for All, that will be coming soon to a book store near you. I am thus highly attuned to the debate over the connection between savings and investment.
That debate resurfaced with a vengeance this morning on Twitter when Noah Smith and Jo Michell, among others, engaged in a sometimes testy exchange on the role of the State in promoting investment. Since that debate is at the core of Keynesian economics, and since my class is prepping for Monday’s midterm, this seems like a great opportunity to enlighten readers of all varieties on what Jo and Noah were on about.…
Roger Farmer's Economic Window
Demand Creates its Own Supply
Roger Farmer | Distinguished Professor of Economics at UCLA

4 comments:

Jan M said...

Yes,Jo is great.He has done lot of good work,not least, by addressing the great ,but now, unfortunately almost forgotten economist Joseph Steindl's work,develop his ideas and transform them into modern times and new findings
http://www.independent.co.uk/news/people/obituary-josef-steindl-1500193.html

"Jo Michell, :A Steindlian account of the distribution of corporate profits and leverage: A stock-flow consistent macroeconomic model with agent-based microfoundations. Working Paper. Post Keynesian Economics Study Group (PKSG)".
http://www.postkeynesian.net/downloads/wpaper/PKWP1412.pdf
abstract:
"Post Keynesian economics has largely forgotten Joseph Steindl's insight that monopolisation of the corporate sector redistributes profits to those firms least likely to invest them productively. Agent-based methods can be used to incorporate Steindl's insights into a simple stock-flow consistent model of monetary circuit. This model illustrates the 'maldistribution of profits' and 'enforced indebtedness' of heterogeneous firms alongside the tendency towards stagnation that occurs with rising monopolisation. The model also demostrates Minsky's assertion that firms' leverage rises over the business cycle can be reconciled with Kalecki's macroeconomic identities showing that profits are 'financed' by the investment expenditures of firms."

Tom Hickey said...

Thanks for that, Jan.

Jan M said...

AThank,YOU Tom,for bring up all those great reads to us! All the best to you!

Calgacus said...

Yes. Steindl was one of the first understand that the postwar era was over (though he was a bit of a broken clock on that) and also the first to see the problems with EU monetary integration.