Credit Rationing and Uncertainty: Complementarity in Post Keynesian and New Keynesian Monetary Economics?

Penny Neal
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Penny Neal: Department of Economics, University of Adelaide

No 1994-01, School of Economics and Public Policy Working Papers from University of Adelaide, School of Economics and Public Policy

Abstract: Introduction This paper seeks to reconcile the post Keynesian and New Keynesian explanations of credit rationing. It argues that this can be done if choice theory is made more general than either post Keynesian or New Keynesian analysis currently allows. A more general theory of choice can be achieved if behaviours are thought of as lying along a behavioural spectrum. This spectrum stretches from behaviour based on decision making in conditions of fundamental uncertainty as emphasised by the post Keynesians at one end, to behaviour based on decision-making in conditions of risk as emphasised by the New Keynesians at the dher end. Thus, this paper argues that the positions currently taken by most post Keynesians and New Keynesians with respect to how decisions are ma,d e are special cases of a more general theory.

Pages: 38 pages
Date: 1994
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