Romer (2000) provides an alternative model to the AS/AD and IS/LM models that abandons the LM schedule by having the short-term interest rate set by the central bank. His framework acknowledges the critical role of the central bank in determining short-term interest rates, which moves mainstream...

Endogenous money represents a mainstay of Post Keynesian (PK) macroeconomics. Analytically, it provides a critical linkage between the financial and real sectors, with the link running predominantly from credit to money to economic activity. The important feature is credit is placed at the...

The desirability of federal budget surpluses became the conventional wisdom in the 1990s. This economist argues that ongoing surpluses will be damaging in several important ways. He proposes that the nation have its debt grow at the same rate as the GDP.

The Bush-Cheney years have been marked by a disappointing economic performance, reflected in a business cycle expansion that is by many measures the weakest since World War II. Moreover, not only has the expansion been weak, it also appears to be ending with a severe financial crisis and the...

Thomas Palley argues that the causes of the “Great Recession†are not primarily to be found in the asset bubble that was allowed to inflate in the housing market and in the financial sector. The bubbles actually reflect the longer-term basis for stagnation that originate in the...

It is widely recognized that economic crises can sometimes trigger enormous change, with regard to both economic theory and the politics of governance. Today, the global economy is struggling with the fall-out from the financial crash of 2008 and the Great Recession of 2007–2009. The...

This paper examines the theory of the Phillips curve, focusing on the distinction between “formation” of inflation expectations and “incorporation” of inflation expectations. Phillips curve theory has largely focused on the former. Explaining the Phillips curve by reference to...