Post-Keynesian Economics: New Foundations, by Marc Lavoie Chapter 7: Open Economy Macroeconomics

Reviewing Marc Lavoie’s comprehensive and well-structured discussion of open-economy macroeconomics allows us to revisit some key Post-Keynesian contributions and confirm their continued relevance to our understanding of international economic, financial and monetary relations. In the process Lavoie draws a consistently sharp contrast with standard-theory concepts and models, much of it organized around his elaboration of endogenous money in an international context and modern trade flows embedded in a highly globalized and financialized world economy which have little to do with comparative advantage. He thereby provides us with a conceptual road map for a meta-economic revolution which recognizes that the world economy has a growth dynamic all of its own rather than being just the sum of its parts, the two-hundred or so national economies connected to each other through their balance of payments and exchange rates.