Macroeconomic policy and the importance of (in)stability

George Kararach ()

Chapter 17 in Liberating Economics From Ideologies and Dystopia, 2025, pp 220-238 from Edward Elgar Publishing

Abstract: Macroeconomic policy is a critical tool for decision-makers globally. This chapter presents an alternative analytical framework to mainstream macroeconomics, drawing on the heterodox tradition of scholars like Marx, Keynes, Robinson, Kaldor, Myrdal, Minsky and Kalecki. These heterodox models offer new insights into key issues such as the relationship between inequality and growth/stagnation, and the stability of long-run growth. Specifically, the chapter addresses topics like financial instability models, “super-multiplier” models and debates around capacity utilisation. It discusses how appropriate macroeconomic policies can influence growth in open economies, emphasising the role of cumulative causation in fostering economic divergence, as well as the limitations imposed by balance of payments constraints on export-led growth. The chapter also examines issues of accumulation, crisis, instability, income distribution, inequality and environmental sustainability.

Keywords: Heterodox framework; Macroeconomic policy; Inequality; Growth; Stagnation; Financial instability; Cumulative causation; Balance of payments constraints; Accumulation; Crisis; Income distribution; Inequality; Environmental sustainability (search for similar items in EconPapers)
Date: 2025
ISBN: 9781035316175
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