G&L

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 [...]

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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 [...]

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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 [...]

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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 [...]

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Philip Pilkington Interviews Marc Lavoie [Updated]

19 June 2012

Philip Pilkington’s interview of Marc Lavoie on his textbook Monetary Economics is available to read at Naked Capitalism. New Directions in Monetary Economics: An Interview with Marc Lavoie – Part I (Update: Part 2 appears here: New Directions in Monetary Economics: An Interview with Marc Lavoie – Part II) Wynne Godley used to think that Keynesians were being [...]

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Balance Of Payments: Part 2 – Double Versus Quadruple Entry Bookkeeping

20 May 2012

Some time back I had started with the first part of a series of posts on this topic: see Balance Of Payments: Part 1. From the same post, here’s from the Australian Bureau of Statistics’ manual Balance of Payments and International Investment Position, Australia, Concepts, Sources and Methods, 1998 (click to enlarge) So we have the current account, the [...]

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G&L’s Monetary Economics – Second Edition

15 April 2012

I got my copy of Monetary Economics by Wynne Godley and Marc Lavoie yesterday. I know some people were waiting for the second edition of the book, and had postponed their purchase to get the newer edition – so they can get it now! There aren’t any changes in this edition – except for correction [...]

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Kaldor’s Reflux Mechanism

12 April 2012

The recent debates of Post Keynesians with Neoclassical/New Keynesians has highlighted that the latter group continues to hold Monetarists’ intuitions. Somehow the exogeneity of money is difficult for them to get rid of, in spite of their statements and rhetoric that money is endogenous in their models. So there is an excess of money in [...]

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More National Accounts: Consumption Of Fixed Capital

29 March 2012

In one of my recent posts, Saving Net Of Investment, I went into gross saving versus saving net of consumption of fixed capital. I showed how depreciation – or more appropriately, consumption of fixed capital – is treated in the flow of funds accounts. Since the transactions flow matrix is a powerful tool for visualizing [...]

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Debt Sustainability

29 March 2012

In a recent paper, Bradford DeLong and Lawrence Summers suggest that a fiscal expansion can be useful to bring an economy from a depressed state (!). The rough idea being that a relaxation of fiscal policy leads to a higher output and the increase in economic activity leads to a stabilization of public debt/gdp ratio. [...]

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