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An essay on horizontalism, structuralism and historical time

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  • Mark Setterfield

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Abstract

Beyond agreement on the basic principles of money’s endogeneity, the development of Post-Keynesian monetary theory has been characterized by considerable dissent and debate. One important aspect of this debate concerns the shape of the credit supply curve in quantity of credit/interest rate space. The argument in this chapter is that that there can be, and to an extent already is, agreement that the horizontal credit supply curve is not a special case, and that the existence of an indeterminate dynamic credit supply schedule provides a general framework capable of accommodating both horizontalist and structuralist arguments. These arguments rest on the distinction between logical and historical time and, in particular, the claim that any construct (including, for example, a credit supply schedule) that is akin to a determinate long run equilibrium relationship is anathema to the methodological foundations of Post-Keynesian economics.

Suggested Citation

  • Mark Setterfield, 2014. "An essay on horizontalism, structuralism and historical time," Working Papers 1402, Trinity College, Department of Economics.
  • Handle: RePEc:tri:wpaper:1402
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    File URL: http://internet2.trincoll.edu/repec/WorkingPapers2014/WP14-02.pdf
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    References listed on IDEAS

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    1. Giuseppe Fontana, 2004. "Rethinking Endogenous Money: A Constructive Interpretation Of The Debate Between Horizontalists And Structuralists," Metroeconomica, Wiley Blackwell, vol. 55(4), pages 367-385, November.
    2. Robert Pollin, 1991. "Two Theories of Money Supply Endogeneity: Some Empirical Evidence," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 13(3), pages 366-396, March.
    3. Giuseppe Fontana, 2003. "Post Keynesian Approaches to Endogenous Money: A time framework explanation," Review of Political Economy, Taylor & Francis Journals, vol. 15(3), pages 291-314.
    4. Lavoie, Marc, 1996. "Horizontalism, Structuralism, Liquidity Preference and the Principle of Increasing Risk," Scottish Journal of Political Economy, Scottish Economic Society, vol. 43(3), pages 275-300, August.
    5. Louis-Philippe Rochon, 2006. "Endogenous Money, Central Banks and the Banking System: Basil Moore and the Supply of Credit," Chapters,in: Complexity, Endogenous Money and Macroeconomic Theory, chapter 9 Edward Elgar Publishing.
    6. Lawson, Tony, 1995. "The 'Lucas Critique': A Generalisation," Cambridge Journal of Economics, Oxford University Press, vol. 19(2), pages 257-276, April.
    7. Arestis, Philip & Howells, Peter, 1996. "Theoretical Reflections on Endogenous Money: The Problem with 'Convenience Lending.'," Cambridge Journal of Economics, Oxford University Press, vol. 20(5), pages 539-551, September.
    8. Thomas I. Palley, 2013. "Horizontalists, verticalists, and structuralists: the theory of endogenous money reassessed," Review of Keynesian Economics, Edward Elgar Publishing, vol. 1(4), pages 406—424-4, OCT.
    9. Louis-Philippe Rochon, 1999. "Credit, Money and Production," Books, Edward Elgar Publishing, number 1565.
    10. Victoria Chick & Sheila Dow, 2002. "Monetary Policy with Endogenous Money and Liquidity Preference: A Nondualistic Treatment," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 24(4), pages 587-607, July.
    11. Cottrell, Allin, 1994. "Post-Keynesian Monetary Economics," Cambridge Journal of Economics, Oxford University Press, vol. 18(6), pages 587-605, December.
    12. Thomas I. Palley, 1996. "Accommodationism versus Structuralism: Time for an Accommodation," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 18(4), pages 585-594, July.
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    Cited by:

    1. Mark Setterfield, 2015. "Heterodox economics, social ontology, and the use of mathematics," Working Papers 1503, New School for Social Research, Department of Economics, revised May 2015.

    More about this item

    Keywords

    Endogenous money; horizontalism; structuralism; historical time; supply of credit;

    JEL classification:

    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers

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