Sunday, May 3, 2015

On the blogs

The Unit Root of the Matter: Is it Demand or Supply? -- Roger Farmer on why the normal rate at which the economy fluctuates is driven by demand. In his words: "aggregate demand, driven by animal spirits, is pulling the economy from one inefficient equilibrium to another." I would say autonomous demand. But close enough.

US External Debt: A Curious Case -- Paul Krugman on his version of dark matter. For him the explanation is: "the differential performance of stock markets." My views here. Basically, there is nothing curious about it really.

Bob Solow on rents and decoupling of productivity and wages -- Branko Milanovic discussing Solow's recent ideas on the political element in distribution. Pablo Bortz suggested the post, but I must note that it falls short of understanding the limitations of the marginalist approach. My views are closer to Pivetti's Sraffian monetary theory of distribution.


  1. What I highlighted in Milanovic's post is that, whatever its shortcomings, he gets the "open system" nature of the Sraffian approach, in this short line: "neo-Ricardians who simply argued that the distribution between w and r can take place at any point along the w-r frontier: it is entirely politically determined."

  2. He says that the Solow story is interesting because it provides: "a 'marriage' between a standard neoclassical view of how income shares of capital and labor are determined (because even if they are determined in a kind of a monopolistic competition, this is still handled by the neoclassical production function), and the distribution of the rent that responds only in part to economic, and mostly to political factors." Can't have both.


Godley versus Tobin on Monetary Matters by Marc Lavoie

  The 4th Godley-Tobin Lecture given by Marc Lavoie, a co-author of Wynne Godley, and one of the leading Post Keynesian authors.