Working Paper No. 205 | August 1997

Macroeconomics without Equilibrium or Disequilibrium

Distinguished Scholar Wynne Godley creates a numerical simulation model that attempts a synthesis between the monetary theory of Hicks and Kaldor, the asset allocation theory of James Tobin, and the Keynesian theory of income and output determination. Methodologically, it substitutes Walrasian rigor for the usual narrative exposition used by post-Keynesian writers—and indeed, by Keynes himself—before the computer age. The meaning of the title is that the model describes neither an equilibrium where prices clear markets nor a disequilibrium where price signals do not work properly because of the rigidities, information inadequacies, etc. characteristic of, for instance, "New Keynesian" macroeconomics.

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