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A fiscal paradox and post-Keynesian economics: a response

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  • Thomas I. Palley

    (AFL-CIO)

Abstract

I thank Tom Michl for his insightful and gracious note (Michl 2013) pointing out a mistake in my paper (Palley 2013a) on fiscal policy in post-Keynesian economics. Despite correctly deriving the analytic condition (ibid., p. 85, footnote 6), I incorrectly drew the IS-ZZ diagram in figure 2, shifting the ZZ further right than the IS. That led me to incorrectly infer and rationalize that expansionary fiscal policy in the Cambridge growth model reduces capitalists' long-run ownership share, when it actually increases it. Correcting figure 2 makes that clear.

Suggested Citation

  • Thomas I. Palley, 2014. "A fiscal paradox and post-Keynesian economics: a response," Review of Keynesian Economics, Edward Elgar Publishing, vol. 2(1), pages 116-117, January.
    • Handle: RePEc:elg:rokejn:v:2:y:2014:i:1:p116-117
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    More about this item

    Keywords

    distribution; growth; Cambridge; neo-Kaleckian; fiscal policy;
    All these keywords.

    JEL classification:

    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution

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