A fiscal paradox and post-Keynesian economics: a response

Thomas Palley

Review of Keynesian Economics, 2014, vol. 2, issue 1, 116-117

Abstract: I thank Tom Michl for his insightful and gracious note (Michl 2013) pointing out a mistake in my paper (Palley 2013a) on fiscal policy in post-Keynesian economics. Despite correctly deriving the analytic condition (ibid., p. 85, footnote 6), I incorrectly drew the IS-ZZ diagram in figure 2, shifting the ZZ further right than the IS. That led me to incorrectly infer and rationalize that expansionary fiscal policy in the Cambridge growth model reduces capitalists' long-run ownership share, when it actually increases it. Correcting figure 2 makes that clear.

Keywords: distribution; growth; Cambridge; neo-Kaleckian; fiscal policy (search for similar items in EconPapers)
JEL-codes: E12 E22 E25 (search for similar items in EconPapers)
Date: 2014
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