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Macroeconomics Without Equilibrium or Disequilibrium


  • Wynne Godley

    (The Jerome Levy Economics Institute)


This paper uses a simulation model to describe the role which bank money and bank loans must play when decisions by households and firms are taken under conditions of uncertainty and when production takes time. Its main purpose is to integrate the theory of money and finance into that of income determination, in what may broadly be called the Keynesian tradition. Stocks of bank money and cash are found to be irretrievably endogenous. Great importance is attached to the accounting framework which, though simplified, comprises a comprehensive system of stocks and flows which enables sequential solutions to be found. The simulation method makes it possible to pin down exactly why the model behaves as it does. The model suggests the basis for a way of looking at the world which is fundamentally different from that used in the neo- classical paradigm.

Suggested Citation

  • Wynne Godley, 1998. "Macroeconomics Without Equilibrium or Disequilibrium," Macroeconomics 9801002, EconWPA.
  • Handle: RePEc:wpa:wuwpma:9801002
    Note: Type of Document - Acrobat PDF; prepared on IBM PC ; to print on PostScript; pages: 56; figures: included

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    JEL classification:

    • E - Macroeconomics and Monetary Economics


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