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A Comparison of New Consensus as a Theoretical Framework of Inflation Targeting with Post-Keynesian Economics

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  • Jan Korda
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    Abstract

    The article deals with the relationship of post-Keynesian economics to new consensus as a theoretical framework of inflation targeting. First, new consensus with its roots in Wicksell´s approach is briefly introduced. In the next parts differences and meeting-points of new consensus and post-Keynesian economics are discussed. Among the main similarities is identified: short term interest rate management, endogeneity of monetary base, endogeneity of money supply. But a lot of basic differences are found (goals of monetary policy, interest rate functions, nature of inflation, shape of Phillips curve and others). As a result, on the general level new consensus and post-Keynesian economics seem to be rather incompatible.

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    Bibliographic Info

    Article provided by University of Economics, Prague in its journal Politická ekonomie.

    Volume (Year): 2010 (2010)
    Issue (Month): 1 ()
    Pages: 92-104

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    Handle: RePEc:prg:jnlpol:v:2010:y:2010:i:1:id:721:p:92-104

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    Related research

    Keywords: Post-Keynesian economics; new consensus; inflation targeting; endogenous money;

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    References

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    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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    1. Philip Arestis & Malcolm Sawyer, 2003. "Inflation Targeting: A Critical Appraisal," Macroeconomics 0309015, EconWPA.
    2. Philip Arestis & Malcolm Sawyer, 2008. "A critical reconsideration of the foundations of monetary policy in the new consensus macroeconomics framework," Cambridge Journal of Economics, Oxford University Press, vol. 32(5), pages 761-779, September.
    3. David Romer, 2000. "Keynesian Macroeconomics without the LM Curve," NBER Working Papers 7461, National Bureau of Economic Research, Inc.
    4. Peter Kriesler & Marc Lavoie, 2007. "The New Consensus on Monetary Policy and its Post-Keynesian Critique," Review of Political Economy, Taylor & Francis Journals, vol. 19(3), pages 387-404.
    5. Giuseppe Fontana, 2007. "Why money matters: Wicksell, Keynes, and the new consensus view on monetary policy," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 30(1), pages 43-60, October.
    6. Bennett T. McCallum, 2001. "Monetary policy analysis in models without money," Review, Federal Reserve Bank of St. Louis, issue Jul, pages 145-164.
    7. Mark Setterfield, 2006. "Is inflation targeting compatible with Post Keynesian economics?," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 28(4), pages 653-671, July.
    8. Philip Arestis & Malcolm Sawyer, 2006. "The nature and role of monetary policy when money is endogenous," Cambridge Journal of Economics, Oxford University Press, vol. 30(6), pages 847-860, November.
    9. David Laidler, 1999. "Passive Money, Active Money, and Monetary Policy," Bank of Canada Review, Bank of Canada, vol. 1999(Summer), pages 15-25.
    10. Marc Lavoie, 2006. "A Post-Keynesian Amendment To The New Consensus On Monetary Policy," Metroeconomica, Wiley Blackwell, vol. 57(2), pages 165-192, 05.
    11. Giuseppe Fontana, 2002. "The Making of Monetary Policy in Endogenous Money Theory: An Introduction," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 24(4), pages 503-509, July.
    12. Louis-Philippe Rochon, 2006. "The more things change . . . inflation targeting and central bank policy," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 28(4), pages 551-558, July.
    13. Laurence H. Meyer, 2001. "Does money matter?," Review, Federal Reserve Bank of St. Louis, issue May, pages 1-16.
    14. John B. Taylor, 2000. "Teaching Modern Macroeconomics at the Principles Level," American Economic Review, American Economic Association, vol. 90(2), pages 90-94, May.
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