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An attempt to integrate Keynes and Kalecki: investment and dynamics

Author

Listed:
  • Maria Isabel Busato
  • Ana Cristina Reif
  • Mario Luiz Possas

Abstract

Keynes and Kalecki were the forerunners of the models of economic dynamics based on the Principle of Effective Demand (PDE) and assigned central role to investment for understanding dynamics. Kalecki’smodel describes a regular cyclical dynamics - with well-marked standard - associated with dual and lagged investment effect. Keynes’s modelin turn describes a potentially unstable dynamics, a result of the decisions of agents whose expectations are formed under conditions of uncertainty. This article aims to build an integrated interpretation of Keynes and Kalecki’s views, enabling a better understanding of the stylized facts that show that the capitalist dynamic is marked by phases of cyclical regularity that are eventually and suddenly broken, leading to instability. JEL Classification: E12; E11; E22.

Suggested Citation

  • Maria Isabel Busato & Ana Cristina Reif & Mario Luiz Possas, 2019. "An attempt to integrate Keynes and Kalecki: investment and dynamics," Brazilian Journal of Political Economy, Center of Political Economy, vol. 39(3), pages 509-526.
    • Handle: RePEc:ekm:repojs:v:39:y:2019:i:3:p:509-526:id:46
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    More about this item

    Keywords

    Dynamics; investment; cycle; instability; principle of effective demand;
    All these keywords.

    JEL classification:

    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E11 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Marxian; Sraffian; Kaleckian
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity

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