Expectational and Portfolio-Demand Shifts in a Keynesian Model of Monetary Growth Fluctuations

Greg Hannsgen and Tai Young-Taft

No PKWP2112, Working Papers from Post Keynesian Economics Society (PKES)

Abstract: We develop a pair of models to show how non-ad-hoc shifts to expectational variables can be used to model tendencies toward crisis. In the Shackle model, as developed in the book Keynesian Kaleidics (1974), uncertainty can lead to a collapse in the marginal efficiency of investment and a jump in liquidity preference. In the Minsky version of the model, excessive private debt can lead to a financial collapse–again an endogenous breakdown in forces supporting growth. We extend the models to indicate how the dynamics of inflation and distribution affect the dynamics.

Keywords: Post Keynesian macro model; Poisson model of financial fragility; Keynesian dynamics; Hyman Minsky; G.L.S. Shackle; Keynesian Kaleidics; endogenous MEI and liquidity preference; financial fragility hypothesis (search for similar items in EconPapers)
JEL-codes: E12 E32 (search for similar items in EconPapers)
Pages: 24
Date: 2021-08
New Economics Papers: this item is included in nep-dge, nep-fdg, nep-hme, nep-isf, nep-mac, nep-mon and nep-pke
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