Capital, distribution and macroeconomics: 'core' beliefs and theoretical foundations

Graham White

Cambridge Journal of Economics, 2004, vol. 28, issue 4, 527-547

Abstract: The paper suggests an alternative 'benchmark' model or 'microfoundations' for theorising about macroeconomic phenomena in the case of competitive equilibria. This alternative reflects a classical-Sraffian explanation of relative prices. This approach also provides a coherent framework for the analysis of the choice of technique in a multi-commodity setting. In turn, it leads to results which throw into question a number of key propositions of conventional macro theory, including the notion of a long-run self-correcting mechanism for involuntary unemployment in the presence of wage and price flexibility. The paper argues that a classical-Sraffian approach provides a means of reconciling Keynesian results with competitive outcomes. Copyright 2004, Oxford University Press.

Date: 2004
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