Credit And Economic Growth

17 September 2014

In a new column for Bloomberg, Noah Smith questions the intuition that credit fuels economic growth. In which I question the most cherished belief of every economics writer in the Universe: http://t.co/3WRGjcGZXE — Noah Smith (@Noahpinion) September 16, 2014 He says: It seems like the only people who don’t instinctively believe in credit-fueled growth are […]


Keen’s Reply To Palley

8 April 2014

Steve Keen has replied to Thomas Palley’s critique of him with an article How not to win an economic argument. All models are incomplete because they ignore many complications in order to highlight a few key concepts. In other times, a simple model is a starting point with the aim that the modeler adds more complications […]


Some Nice Words On Wynne Godley And Monetary Economics

30 October 2013

I am reading this book The Oxford Handbook of Post-Keynesian Economics, Volume 1: Theory and Origins and it has some nice chapters! In his chapter Postkeynesian Precepts For Nonlinear, Endogenous, Nonstochastic, Business Cycle Theories, K. Vela Velupillai has some nice words on Wynne Godley and his book Monetary Economics co-authored with Marc Lavoie: (snipping via amazon.com)


Flow Of Funds And Keynesian Macroeconomics

15 September 2013

The subject of money, credit and moneyflows is a highly technical one, but it is also one that has a wide popular appeal. For centuries it has attracted quacks as well as serious students, and there has too often been difficulty in distinguishing a widely held popular belief from a completely formulated and tested scientific […]


The Rate Of Saving In Wynne Godley’s Models [Updated]

13 September 2013

In Krugman’s blog post which is dismissive of Wynne Godley’s work (referred in my previous post) he (Krugman) makes the following claim: First involved consumption spending. Conventional Keynesian consumption functions suggested that the savings rate would rise as incomes rose — and this wasn’t just the Keynesian interpreters, Keynes himself made the same claim. which […]


NYT On Wynne Godley

11 September 2013

There’s a nice new article on Wynne Godley today in The New York Times. An interesting thing in the article is the mention of intuition via models while mentioning his book Monetary Economics. Why does a model matter? It explicitly details an economist’s thinking, Dr. Bezemer says. Other economists can use it. They cannot so easily […]


Random Tidbits On National Accounts And Keynesian Models Of Income And Expenditure

13 December 2012

I came across this article (via a Tweet from Stephen Kinsella): Accounting As The Master Metaphor Of Economics by Arjo Klamer and Donald McCloskey which discusses how the framework of national accounts has been pushed to the background in economic analysis over the years. It is a nice read – although boring in a few places. I […]


Origins Of The Sectoral Balances Identity

29 November 2012

I thought I should share what I found recently about who was to state the sectoral balances identity first – since it comes across as enlightening to say the least. I found the identity in Nicholas Kaldor’s 1944 article Quantitative Aspects Of The Full Employment Problem In Britain. It was published as Appendix C to Full Employment […]


The α2 Parameter In Stock-Flow Consistent Models

1 August 2012

Let us think of a closed economy. Assuming – every year the government runs a budget deficit – a careless analysis would imply the public debt keeps rising relative to gdp. Without going into derivation – which you can find in other sources – it can be shown that if there is a growth rate […]


More On Wynne Godley’s Methodology

22 July 2012

Matias Vernengo has a post on Stock-Flow Consistent Macroeconomics: Stock-Flow With Consistent Accounting (SFCA) Models. He has a nice way of giving a short description of pricing in the G&L models: In my view, the stock-flow and the demand driven (and I should say, the fact that price dynamics is orthogonal to the income flow determination […]