{"id":861,"date":"2016-06-22T10:00:44","date_gmt":"2016-06-22T08:00:44","guid":{"rendered":"http:\/\/docenti-deps.unisi.it\/sergiocesaratto\/?page_id=861"},"modified":"2018-11-22T14:51:29","modified_gmt":"2018-11-22T13:51:29","slug":"pke","status":"publish","type":"page","link":"https:\/\/docenti-deps.unisi.it\/sergiocesaratto\/pke\/","title":{"rendered":"Post-keynesian Economics"},"content":{"rendered":"

NEWS<\/strong><\/p>\n

In the Academic Year 2018-19 the course will be taught by prof. Fabio Petri. I will participate giving some lectures on endogenous money theory<\/p>\n

UPDATES (2017-18)
\n<\/strong><\/p>\n

25 november<\/strong> Below you will find the final programme<\/strong> and related readings of Cesaratto’s module. Check that you have on your penn drive all the materials (unless downloadable)<\/p>\n

15 november<\/strong> notes on Solow (most in Italian, I will sum up them in English shortly) Neoclassical Growth Theory (in Italian)<\/a><\/p>\n

14 november 2017<\/strong> notes on Harrod Harrod,<\/a> the neokaleckian models\u00a0CE e NK models (short version)<\/a> and of the book I was mentioning Book<\/a><\/p>\n

13 november 2017<\/strong> here some short notes on Garegnani’s Note on consumption. Sorry for my handwriting! These notes do not substitute a careful reading of the original paper. Short notes on PG Notes on c<\/a><\/p>\n

Below you will also find some proposals for your Master degree final dissertation<\/p>\n

Post-Keynesian Economics – Program 2017-18<\/strong><\/p>\n

The course is held by proff.s. S.Cesaratto, Fabio Petri<\/a> ed Ernesto Screpanti<\/a>. There will be 4 or 6 hours lectures per week, according to the lecturer. Students are warned that the course is challenging and mainly addressed to students with deep interest in economic analysis and critical thinking<\/strong>.<\/p>\n

The first 3 lectures (26\/27\/28 September) 2017-18 will be held by prof. Stavros Mavroudeas (University of Macedonia – Thessaloniky, Greece) on the marxian theory of the crises and the Greek crisis (28 September we shall participate to the department seminar on the last topic in aula Goodwin). Prof. Cesaratto will be present. <\/strong>Papers for prof. Mavroudeas’ lectures:<\/p>\n

Introduction to crisis theory<\/a> <\/span> <\/strong><\/p>\n

Marx and the theory of economic crisis<\/a> <\/strong><\/p>\n

The Greek Crisis<\/a> <\/strong><\/p>\n

Programme<\/strong><\/p>\n

Module Prof. Ernesto Screpanti<\/strong> <\/em><\/p>\n

The course begins with a presentation of classical and Marxian economics, focusing on the theory of prices as determined by production condition, on Marx\u2019s critique of Say\u2019s law, and on the theories of crisis and business cycle.<\/p>\n

Then Keynes\u2019 and Kalecki\u2019s approaches to effective demand are presented. The notion of underemployment equilibrium is illustrated. It is argued that the level of activity is determined by the autonomous components of aggregate demand, and that these are widely conditioned by the animal spirits of investors and the uncertainty of expectations. Prices are fixed by firms, on the ground of a markup rule, and are determined by production conditions. Income distribution plays a fundamental role in determining the magnitude of the income multiplier.<\/p>\n

Finally, by means of the Aggregate Supply – Aggregate Demand model, a comparison is proposed between the monetarist, neo-Keynesian, and Post-Keynesian models.<\/p>\n

Screpanti E., Zamagni S. (2005) An outline of the history of economic thought<\/em>, second edition, Oxford: Oxford University Press. Sections: 2.2, 3.1, 4.3, 7.1, 7.2, 7.3, 9.5, 9.6<\/p>\n

Module Prof. Fabio Petri<\/strong><\/p>\n

This module tries to explain why the advances in capital theory due to Sraffa and others have persuaded many economists that the marginalist\/neoclassical approach is irremediably flawed and therefore a turn to another approach appears inevitable. The module presents the basic structure of the neoclassical approach, the roots of its differences from the classical\/Marxian approach, and the difficulties it encounters in dealing with capital goods both in its traditional versions and in its recent neo-Walrasian versions.<\/p>\n

Garegnani, P. (1990), \u2018Quantity of capital\u2019 in J. Eatwell, M. Milgate, P. Newman (a cura di), The New Palgrave: Capital Theory<\/em>, pp. 1-75.<\/p>\n

Petri, F. (2016), \u201cWhat capital theory can teach us\u201d, forthcoming in volume collecting the 2014-15 Pisa lectures on heterodox ecnomic theory.<\/p>\n

Petri, F. (2016) \u2018Capital Theory\u2019, in G. Faccarello, H. D. Kurz, eds., Handbook of the History of Economic Analysis<\/em> vol. III.<\/p>\n

Petri, F. (2015) Review of M. Lavoie, Post-Keynesian Economics: New Foundations, in Review of Political Economy<\/em>, 2015 (4). \u00a0<\/em><\/p>\n

Programme prof. Petri<\/em>
\n<\/strong><\/p>\n

More detailed program of Prof. Petri\u2019s module in the PostKeynesian Economics lecture course.<\/p>\n

Classical approach: general view, theory of wages. Marginal\/Neoclassical approach: factor demand curves, symmetry, no exploitation, cooperation of sacrifices. Difference in data when wanting to determine rate of profit. Difference in effect of change of real wages.<\/p>\n

Simple equations of prices of production. With advanced wages and wage-inclusive technical coefficients, one obtains an eigenvalue problem, and then the Perron-Frobenius theorem guarantees there exists an economically acceptable solution and it is unique. Graphical analysis of choice of techniques via wage curves.<\/p>\n

Walras as explained by Garegnani. Capital as a single factor of variable \u2018form\u2019, an amount of value. Wicksellian simple model with labour and land anticipated for only one period. Why value capital needed even with complete disaggregation. Another example of simple long-period equilibrium for a corn-iron economy. Reswitching: Samuelson\u2019s \u2018Austrian\u2019 example. Reverse capital deepening: Samuelson\u2019s example, and value of capital derivable from wage curves. Long-period demand for capital fundamental for investment theory. Current macro theory takes investment adapting to savings as obvious, but totally criticisable. Investment fraction of demand for value capital, between 1 and 1\/2; durable capital value changes with distribution.<\/p>\n

Shift to neo-Walrasian equilibria with Lindahl, Hayek, Hicks. Walras wanted to determine a persistent equilibrium. Lindahl abandons the aim of determining long-period equilibria. Impermanence problem; real reason for the auctioneer is vectorial capital endowment. Price-change problem (or future-prices problem): perfect foresight is nonsense; expectations are indefinite. Hicks\u2019s recantation. Substitutability problem. Hicks and sticky wages. Illegitimacy of assuming consumers have full-employment income when firms do not demand all labour supply.<\/p>\n

Readings: Garegnani, Quantity of Capital, in Eatwell Milgate Newman, The New Palgrave: Capital Theory, 1990; Petri, What Capital Theory Can Teach Us, ms., 2015; Petri, Microeconomics for the Critical Mind, ch. 2: Perron-Frobenius theorem, and depreciation of durable capital; optional: Petri, OeconomiaTime7.<\/p>\n

Prof. Petri is ready to let you have the recordings of his lectures (except the first one which was not recorded), heavy files (around 150 megabytes each) that cannot be sent by email.<\/p>\n

Examples of questions<\/strong><\/p>\n

    \n
  1. K. Dmitriev saw Ricardo\u2019s problem very clearly: \u201cThus, we are apparently trapped in a logical circle: profit must be known in order to determine value, but profit itself is dependent on value\u201d. Explain why in the classical approach the vicious logical circle in fact is not there.<\/li>\n<\/ol>\n

    Formulate the equations that determine long-period prices in an economy that produces corn and iron with corn, iron and labour, assuming advanced wages and using wage-inclusive technical coefficients. Show that one obtains an eigenvalue problem.<\/p>\n

    Explain why the neoclassical idea, that competitive wages will decrease as long as labour supply is greater than demand, requires a downward-sloping and rather elastic labour demand curve for its plausibility.<\/p>\n

    What was Walras\u2019 basic contradiction?<\/p>\n

    Explain why capital conceived as a single factor of variable \u2018form\u2019 must necessarily be measured as an amount of exchange value, and show graphically why this makes it impossible to take its endowment as given in order to determine equilibrium income distribution.<\/p>\n

    Explain why complete disaggregation does not eliminate the need for capital conceived as a single factor in traditional, long-period neoclassical general equilibria.<\/p>\n

    Prove that the value, of an ensemble of durable machines of the same type but uniformly distributed by age, rises relative to the value of a new machine of the same type if the rate of interest rises.<\/p>\n

    Briefly explain the impermanence problem, the future-prices (or price-change) problem, and the substitutability problem of neo-Walrasian equilibria.<\/p>\n

    Programme Prof. Sergio Cesaratto (updated 3 11 2017)
    \n<\/strong><\/p>\n

    This module takes stock of proff. Mavroudeas and Screpanti\u2019s introduction to the Classical economists and Marx, and of prof. Petri\u2019s illustration of the marginalist value and distribution theory to show the relevance of the capital theory critique to rescue\u00a0 the Keynesian theory of effective demand from the reabsorption in neoclassical theory. This relevance was firstly pointed out by Garegnani (1978-79). In this contribution Garegnani moves from the Wicksellian macroeconomic long-period equilibrium (that is still the current reference for modern macroeconomics) and its weakness vis-\u00e0-vis the capital critique. He then exposes the most revolutionary aspects of Keynes\u2019 General Theory<\/em>, in particular the overturning of the neoclassical saving-investment nexus. Unfortunately, Keynes also accepted some fundamental conclusions of the dominant theory and this opened the way to its reabsorption by that theory. Garegnani shows that, precisely because the capital critique overthrown of those conclusions, we may confidently safeguard the most innovative parts of the General Theory<\/em>.<\/p>\n

    Keynes\u2019 most original results were, however, expressed in a short-run framework, with a given productive capacity. The challenge for heterodox economists is, therefore, to extend those results to a long period context, when capacity is allowed to vary. In this regard we shall consider two alternative demand-led growth models, the Sraffian supermultiplier model (Cesaratto et al. 2003) and the Neo-Kaleckian model (Lavoie 2006), and compare them (Cesaratto 2015, 2016).<\/p>\n

    In these models, it is aggregate demand that leads capital accumulation.<\/p>\n

    The supermultiplier approach will be linked to another heterodox strong point, endogenous money theory<\/em>. Nowadays, also many conventional economists and most central bankers increasingly openly support this view. It will, however, be shown that while endogenous money theory plays a decisive role in heterodox economics, it performs only an ancillary role in mainstream theory.<\/p>\n

    Readings<\/strong><\/p>\n

    (most of the materials will be provided by prof. Cesaratto, bring a pen drive, or downloadable)<\/strong><\/p>\n

    PKE-Cesaratto 2017-18 Final programme<\/em> <\/strong><\/p>\n

    * compulsory readings<\/em> <\/strong><\/p>\n

    Useful preliminary overviews<\/em> <\/strong><\/p>\n

    S.Cesaratto, The modern revival of the Classical surplus approach: implications for the analysis of growth and crises, <Quaderni del Dipartimento di Economia politica e statistica>, Universit\u00e0 di Siena, n. 735, 2016.*<\/strong><\/p>\n

    S.Cesaratto, Sei lezioni di Economia \u2013 Conoscenze necessarie per capire la crisi e come superarla<\/em>, Imprimatur, Reggio Emilia, 2016 (in Italian, chapters 1\/2\/3\/4)<\/p>\n

    1) Garegnani, Wicksell and Keynes<\/em> <\/strong><\/p>\n

    Garegnani, P. (1978-79) Notes on consumption, investment and effective demand, parts I & II, Cambridge Journal of Economics<\/em>, 2 & 3, pp. 335-353, 63-82. *<\/strong><\/p>\n

    Garegnani, P. (2015) On the factors that determine the volume of investment, English translation of chapters III & IV of Garegnani (1962), Review of Political Economy<\/em>, 27 (2), 111-133, the first five pages * <\/strong><\/p>\n

    Further readings<\/em> <\/strong><\/p>\n

    Garegnani, P. and Palumbo, A. (1998) ‘Accumulation<\/em> of Capital<\/em>‘, in H. D. Kurz and N. Salvadori (eds), The Elgar<\/em> Companion to Classical Economics<\/p>\n

    A summing up and some extensions in:<\/p>\n

    S.Cesaratto, Garegnani, Ackley and the years of high theory at Svimez, shortly forthcoming in the Working papers series of Centro Sraffa (<\/strong> and <\/strong>forthcoming in a Festschrift volume in honour of Mark Lavoie and Mario Seccareccia edited by J.P. Rochon and H. Bougrine, Edward Elgar, 2018).<\/p>\n

    2) On heterodox growth models<\/em> <\/strong><\/p>\n

    S.Cesaratto, Lecture notes on Harrod, Solow (only the basic elements and stability) and Heterodox models* <\/strong> Harrod,<\/a> CE e NK models (short version)<\/a>\u00a0\u00a0\u00a0 Neoclassical Growth Theory (in Italian)<\/a> \u00a0<\/a><\/p>\n

    H.G.Jones, An introduction to modern theories of economic growth, chapters 3 and 5 (only the basic elements of Harrod\u2019s and Solow\u2019s model<\/strong>). * Book<\/a>
    \n<\/strong><\/p>\n

    S.Cesaratto, Short note on \u201cThe stability of Solow\u2019s model and the neoclassical factors\u2019 substitution mechanisms\u201d *Stability in Solow’s model Short note<\/a> <\/strong><\/p>\n

    Lavoie, M. (2006) Introduction to Post-Keynesian Economics<\/em> (Basingstoke: Palgrave Macmillan), Chapter 5<\/strong> *<\/strong><\/p>\n

    Cesaratto, S., Stirati, A. & Serrano, F. (2003) Technical change, effective demand and employment. Review of Political Economy<\/em>, 15, pp. 33-52 (sections 3.3\/4 and 4.1 only<\/strong>). *<\/strong><\/p>\n

    Further readings<\/em> <\/strong><\/p>\n

    Cesaratto, S. \u201cNeo-Kaleckian and Sraffian controversies on the theory of accumulation.\u201d Review of Political Economy<\/em>, 2015, 27 (2): 154-182.<\/p>\n

    3) On endogenous money<\/em> <\/strong><\/p>\n

    Jakab, Z., Kumhof, M. (2015): \u2018Banks are not intermediaries of loanable funds – and why this matters\u2019, Bank of England, Working Paper No. 529. pp. 1-14 only <\/strong> *<\/strong><\/p>\n

    McLeay M., Amar, R. Ryland, T. (2014): Money creation in the modern economy<\/em>, Bank of England, <Quarterly Bulletin>, No. 1*<\/strong><\/p>\n

    Ulrich Bindseil<\/a> and Philipp J. K\u00f6nig<\/a>, (2013) Basil J. Moore’s Horizontalists and Verticalists: an appraisal 25 years later, Review of Keynesian Economics<\/em>, downloadable *<\/strong><\/p>\n

    Further readings<\/em> <\/strong><\/p>\n

    On endogenous money:<\/p>\n

    Lavoie M. (2005): \u2018A primer in endogenous credit-money\u2019, in: Rochon, L.P., Rossi S. (eds.), Modern Theories of Money. The Nature and Role of Money in Capitalist Economies<\/em>, Edward Elgar, Cheltenham (UK).<\/p>\n

    Werner, R.A. (2016) <\/strong>A lost century in Economics: Three theories of banking and the conclusive evidence, International Review of Financial Analysis<\/em>, 46, 361-379, disponibile on line.<\/p>\n

    Richard A. Werner How do banks create money, and why can other firms not do the same? An explanation for the coexistence of lending and deposit-taking, International Review of Financial Analysis<\/em>, Volume 36, 2014A, pp. 71-77<\/p>\n

    Richard A. Werner Can banks individually create money out of nothing? \u2014 The theories and the empirical evidence International Review of Financial Analysis<\/em>, Volume 36, 2014B, pp. 1-19.<\/p>\n

    These two papers on autonomous demand as financed by endogenous money creation:<\/p>\n

    Cesaratto, S. (2017a), Initial and Final Finance in the Monetary Circuit and the Theory of Effective Demand, Metroeconomica<\/em>, Volume 68, Issue 2, pp. 228\u2013258; <\/em>doi: 10.1111\/meca.12132, onlinelibrary.wiley.com\/doi\/10.1111\/meca.12132\/pdf<\/p>\n

    Cesaratto, S. (2017b), Beyond the traditional monetary circuit: endogenous money, finance and the theory of long-period effective demand, Quaderni DEPS, no. 757<\/a>.<\/p>\n

    How autonomus money finances State spending (and as an introduction to Modern Monetary Theory-MMT)<\/p>\n

    Lavoie L. (2013): \u2018The monetary and fiscal nexus of neo-Chartalism: A friendly critical look\u2019, Journal of Economic Issues<\/em>, 47(1), pp. 1-32.<\/p>\n

    For those interested in endogenus money and monetary policy:<\/p>\n

    Basil Moore<\/span>, Horizontalists and Verticalists: The Macroeconomics of Credit Money<\/span> <\/em>, (Cambridge University Press<\/span>, Cambridge, UK<\/span> 1988<\/span>). (the preface here Moore 1988 preface<\/a>)<\/p>\n

    U. Bindseil<\/span>(2004) Monetary Policy Implementation<\/span> <\/em>, (Oxford University Press<\/span>, Oxford<\/span>)<\/p>\n

    U. Bindseil<\/span> (2014) Monetary Policy Operations<\/em> and the Financial System<\/em>. (Oxford University Press<\/span>, Oxford<\/span>)
    \n<\/span><\/p>\n

    Dysiatat P. (2008) Monetary policy implementation: Misconceptions and their consequence, Bank of International Settlements Working paper no. 269<\/p>\n

    S.Cesaratto, La\u00a0 politica monetaria (com\u2019\u00e8 e com\u2019\u00e8 raccontata dai libri di testo). A Primier <\/strong> La politica monetaria 2 – Per PMFUME 1 <\/a>(versione molto provvisoria e inompleta, con molti refusi ecc)<\/p>\n

    Examples of questions<\/strong><\/p>\n

    – Sum up the arguments Garegnani develops in \u201cNotes on consumption\u201d<\/p>\n

    –\u00a0 Is the endogenous money view consistent both with the heterodox and the orthodox views?<\/p>\n

    – Wicksellian model and of the Neoclassical Synthesis similarities and differences (see Note on consumption: the NS embodies some keynesian element).<\/p>\n

    – The Harrodian instability<\/p>\n

    – The role of the capital theory controversy to rescue Keynes\u2019 most innovative results.<\/p>\n

    – The CE and NK models<\/p>\n

    – The supermultiplier model<\/p>\n

    – Exogenus and endogenus money theories<\/p>\n

    Some proposals for the Master degree final dissertatio<\/strong>n<\/p>\n