OPPapers.com

Pkt

Post-Keynesian economic was formed and developed by economists such as Joan Robinson and Nicholas Kaldor who believed Keynesian economics was based on disequilibrium and uncertainty, and that challenges the general equilibrium assumptions of neo-classical theory. The main aim of post-Keynesian economics is to complete the unfinished Keynesian revolution.
Post-Keynesian economists fundamentally used ideas from Keynes and his concept of effective demand, Marxist economist Michael Kalecki to provide a critique of neo-classical economics beliefs and an alternative theory of markets. These economists again emphasise uncertainty, real time and actual market conditions. They also revived the classical link between macroeconomic theories of income distribution and economic growth using Keynesian analysis.
They emphasised that the role of financial markets and rejected the quantity theory of money, preferring effective demand as the major influence on income distribution.1

FOUNDATION@OF@POST|KEYNESIAN@ECONOMIC
MAJOR DEVELOPMENTS
In 1930s, Harrodfs work on growth dynamics was the first development of post-Keynesian economic which distinct from Keynesian analysis. The prevailing theory in economics was static rather than dynamic. Harrodsf argued what was needed is a body of theory to explain what caused the observable movement of the economic system to change overtime. The Harrod-Domar formula, in which the growth rate as the dependent variable, is determined by the propensity to save and the incremental capital/output ratio.2
eThe Accumulation of Capitalf by Robinson and eReview of Economic studiesf by Kaldor were two key writings, which appeared in 1956. Both explained about the distinction between wages and profits in the work of Kalecki to explain an important aspect of growth dynamics, one inextricably linked to the distribution of income. 2 Such as an increase in the growth rate, because of the higher level of investment that it implied,...