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Teaching Post Keynesian exchange rate theory

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  • John Harvey

Abstract

The goal of this paper is to provide a model and method for those wishing to include the Post Keynesian perspective when teaching exchange rate theory. It begins by reviewing neoclassical approaches (purchasing power parity, the monetary model, and the Dornbusch model) and then develops a graphical Post Keynesian model that is based on Keynes's Z-D diagram, endogenous money, a currency market driven by portfolio capital flows, and no assumption of a tendency toward full employment or balanced trade. The model is then used to look at historical examples and policy.

Suggested Citation

  • John Harvey, 2007. "Teaching Post Keynesian exchange rate theory," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 30(2), pages 147-168.
    • Handle: RePEc:mes:postke:v:30:y:2007:i:2:p:147-168
    DOI: 10.2753/PKE0160-3477300201
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    References listed on IDEAS

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    1. Lucio Sarno & Mark P. Taylor, 2002. "Purchasing Power Parity and the Real Exchange Rate," IMF Staff Papers, Palgrave Macmillan, vol. 49(1), pages 1-5.
    2. John T. Harvey, 2004. "Deviations from uncovered interest rate parity: a Post Keynesian explanation," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 27(1), pages 19-35.
    3. Cheung, Yin-Wong & Chinn, Menzie David, 2001. "Currency traders and exchange rate dynamics: a survey of the US market," Journal of International Money and Finance, Elsevier, vol. 20(4), pages 439-471, August.
    4. Victoria Chick, 1983. "Macroeconomics after Keynes: A Reconsideration of the General Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262530457, April.
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    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Sull'uscita dall'euro non siamo "catastrofisti". Una risposta a Gennaro Zezza
      by keynesblog in Keynes Blog on 2015-03-04 17:35:04

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    Cited by:

    1. Fidelina B. Natividad-Carlos, 2014. "Exchange-Rate Overshooting: An Analysis for Intermediate Macro," UP School of Economics Discussion Papers 201414, University of the Philippines School of Economics.
    2. Biagio Bossone, 2021. "Global Capital, the Exchange Rate, and Policy (In)Effectiveness," Working Papers PKWP2113, Post Keynesian Economics Society (PKES).

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    More about this item

    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • A20 - General Economics and Teaching - - Economic Education and Teaching of Economics - - - General

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