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Kaldor’s Growth Plan

8 August 2012

Dani Rodrik has a Project Syndicate article titled No More Growth Miracles and in my view rightly identifies problems of the world economy, although has less to say how to resolve the crisis. These were most well understood by Nicholas Kaldor (who was touched by genius in Wynne Godley’s words). In the previous post How To Find Nicholas Kaldor’s Works, […]


Recommended Readings

28 May 2012

The crisis has a lot of connections with the way Macroeconomics was done in the 1970s and this interests me a lot. Of course the equally important reason was that Nicholas Kaldor and Wynne Godley were highly involved in the public discussions. Here are some books I collected which have special importance to the Cambridge […]


Kaldor On Keynes

10 May 2012

Good read on the Keynesian principle of effective demand and the practice of Keynesianism till it was abandoned using faulty reasoning in the 70s and 80s. Nicholas Kaldor from 1983:


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 […]


Is Paul Krugman A Verticalist?

31 March 2012

24 years back, Basil Moore wrote a book Horizontalists And Verticalists: The Macroeconomics Of Credit Money (Cambridge University Press, 1988) which begins like this: The central message of this book is that members of the economics profession, all the way from professors to students, are currently operating with a basically incorrect paradigm of the way modern […]


Exorbitant Privilege

18 March 2012

My last post was on U.S. net income payments from abroad and how it continues to be in the favour of the United States. The late Wynne Godley had been analyzing this since 1994. In an article titled U.S. Trade Deficits: The Recovery’s Dark Side?, written with William Milberg, he had a section called “Foreign indebtedness and the […]


Kalecki’s Profit Equation

12 March 2012

In my post The Transactions Flow Matrix, I went into how a full transactions flow matrix can be constructed using a simplified national income matrix. Let us reanalyze the latter. The following is the same matrix with some modifications – firms retain earnings and there are interest payments. FU is the undistributed profits of firms. […]


National Saving

28 February 2012

Some of the previous posts went into the economic concept of Private Saving and Private Saving Net of Investment. For a closed economy these are: Private Saving = Private Investment + Budget Deficit Private Saving Net of Investment = Budget Deficit For an open economy, we add the current balance of payments to the right […]


Saving And Borrowing

25 February 2012

I recently heard from an online commentator that saving is the opposite of borrowing. While there is some “intuition” to this, the following exercise is show it is possible to have a positive saving and incur huge liabilities at the same time. To complicate the matter the word “Savings” is used. Now, in national accounts, this […]


Martin Wolf Pays A Generous Tribute To Anthony Thirlwall

20 February 2012

Readers of this blog will notice how I attach special importance to the balance of payments in telling the story of how economies work. In a recent blog post Can one have balance of payments crises in a currency union? at FT, Martin Wolf refers to the work of Anthony Thirlwall – who has made great contributions to the […]