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Capacity Utilization, Inflation, and Monetary Policy: The Duménil and Lévy Macro Model and the New Keynesian Consensus

Author

Listed:
  • Marc Lavoie

    (Department of Economics, University of Ottawa, Canada, marc.lavoie@uottawa.ca)

  • Peter Kriesler

    (University of New South Wales, p.kriesler@unsw.edu.au)

Abstract

The article considers the adjustment toward long-run equilibrium within the Duménil and Lévy macro model, with modifications. Findings show that long-run convergence to fully adjusted positions with normal utilization is not achieved when a more realistic reaction function is proposed. Classical equilibrium occurs when a vertical Phillips curve is substituted, but the model is isomorphic to the “new consensus†model and to features of “new†endogenous growth theory. JEL classification: E12, E40, E52, E58

Suggested Citation

  • Marc Lavoie & Peter Kriesler, 2007. "Capacity Utilization, Inflation, and Monetary Policy: The Duménil and Lévy Macro Model and the New Keynesian Consensus," Review of Radical Political Economics, Union for Radical Political Economics, vol. 39(4), pages 586-598, December.
  • Handle: RePEc:sae:reorpe:v:39:y:2007:i:4:p:586-598
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    Citations

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    Cited by:

    1. Marc Lavoie, 2010. "Surveying Short-run and Long-run Stability Issues with the Kaleckian Model of Growth," Chapters,in: Handbook of Alternative Theories of Economic Growth, chapter 6 Edward Elgar Publishing.
    2. Soumya Datta, 2016. "Macrodynamics of debt-financed investment-led growth with interest rate rules," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 39(4), pages 593-624, October.
    3. Peter Skott, 2010. "Growth, Instability and Cycles: Harrodian and Kaleckian Models of Accumulation and Income Distribution," Chapters,in: Handbook of Alternative Theories of Economic Growth, chapter 5 Edward Elgar Publishing.
    4. Eckhard Hein & Marc Lavoie & Till van Treeck, 2011. "Some instability puzzles in Kaleckian models of growth and distribution: a critical survey," Cambridge Journal of Economics, Oxford University Press, vol. 35(3), pages 587-612.

    More about this item

    Keywords

    monetary policy; central bank; inflation; capacity utilization; new Keynesian; Marxism;

    JEL classification:

    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian
    • E40 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - General
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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