2. A New Framework for Macroeconomics

Mason Gaffney

American Journal of Economics and Sociology, 2009, vol. 68, issue 4, 889-982

Abstract: Most forms of macroeconomics today, whether Keynesian or monetarist, presuppose that problems of economic instability can be treated as errors in financial management. Neither fiscal nor monetary policy recognizes the existence of systemic faults in the real economy that result in overinvestment in durable capital that turns over slowly, in contrast to forms of capital that interact more frequently with land and labor. Only by removing serious distortions in microeconomic relations can macroeconomic problems be resolved. The current global economic crisis exemplifies the limitations of policies that ignore distortions in the rate of turnover of investment capital.

Date: 2009
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https://doi.org/10.1111/j.1536-7150.2009.00658.x

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