Working Paper: NBER ID: w23109
Authors: Roger E. A. Farmer
Abstract: This paper explains the connection between ideas developed in my recent books and papers and those of economists who self-identify as Post Keynesians. My own work is both neoclassical and ‘old Keynesian’. Much of my published work assumes that people have rational expectations and that ‘animal spirits’ should be modeled as a new fundamental. I adopt a general equilibrium framework to model the macroeconomy. But although I write from a neo-classical tradition the themes I explore in my published writing have much in common with heterodox economics. This paper explains the common elements between these seemingly disparate traditions. I make the case for unity between Post-Keynesian and General Equilibrium Theory under the banner of Post-Keynesian Dynamic Stochastic General Equilibrium Theory.
Keywords: Post-Keynesian Economics; Dynamic Stochastic General Equilibrium; Animal Spirits; Labor Market; Unemployment
JEL Codes: E0; E12
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| expectations of stock market participants (animal spirits) (D84) | economic outcomes (F61) |
| structure of the labor market (J40) | unemployment outcomes (J65) |
| expectations of stock market participants (animal spirits) (D84) | aggregate demand (E00) |
| aggregate demand (E00) | unemployment rates (J64) |