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Teaching Post Keynesian Exchange Rate Theory


  • John Harvey

    () (Department of Economics, Texas Christian University)


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, 2006. "Teaching Post Keynesian Exchange Rate Theory," Working Papers 200601, Texas Christian University, Department of Economics.
  • Handle: RePEc:tcu:wpaper:200601

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    References listed on IDEAS

    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. Victoria Chick, 1983. "Macroeconomics after Keynes: A Reconsideration of the General Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262530457, January.
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    Blog mentions

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    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.

    More about this item


    exchange rate; Post Keynesian; teaching;

    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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