Post-Keynesian Approach

1. Presentation of
Economics

2. Post Keynesian
Approach

3. Content
• Introduction
• Characteristics of Post Keynesian Economics
• Strands of PKE
• The Post Keynesian Theory of Income Distribution in the Corporate
Economy
• Post Keynesian Employment Analysis
• References

4. What is post Keynesian Economics?
The term "post-Keynesian" was first used to refer to a distinct school of
economic thought by Eichner and Kregel (1975)
The Post Keynesian approach to economic growth is shown to focus on
the expansion of aggregate demand, with a distinctive approach to
monetary, fiscal and other dimensions of macroeconomic policy.

5. CHARACTERISTICS OF POST-KEYNESIAN
ECONOMICS
• Effective demand
The economy is demand-determined both in the short
run and the long run; supply adapts to demand. At all times, it is
investment that determines saving, rather than the converse.
• Historical and dynamics
We must always consider the transition from one
time position to another, and recognize that the conditions under which
this transition occurs may affect the final position of equilibrium.
• The possible negative of flexible
Because of income effects, price flexibility may
worsen impact the situation that it was meant to correct.

6. CHARACTERISTICS OF POST-KEYNESIAN
ECONOMICS
• Relevant and contemporary microeconomics
Post-Keynesian microeconomics rests on
decisions of a lexicographic nature and on inversed L-shaped cost curves.
• Pluralism of theories and methods
Reality can take several forms. As such, there are a
number of different methods as well as economy theories that may appear
to rival one.

7. STRANDS OF PKT:
There are a number of strands to post-Keynesian theory with different
emphases.
• Joan Robinson regarded Michał Kalecki’s theory of effective demand to
be superior to Keynes’ theories. Kalecki's theory is based on a class
division between workers and capitalists and imperfect competition.
• Robinson also led the critique of the use of aggregate production
functions based on homogeneous capital – the Cambridge capital
controversy – winning the argument but not the battle.

8. THE POST KEYNESIAN THEORY OF INCOME
DISTRIBUTION IN THE CORPORATE ECONOMY
The post Keynesian theory of income distribution in the corporate economy was
developed in the 1950s and 1960s by Robinson, Nicholas Kaldor, Liugi Pasinetti,
and other Cambridge economists. These writers, Kaldor and Pasinetti developed
the clearest formal expressions of the theory, formations which enables them to
derive results which were found to be surprising by more post Keynesian
economics.
The conclusions of this theory has 6 sections shows different concerns:
1. Developed a model of post Keynesian economics in first section
2. In second section model is used to show the relationships among a variety of
post keynesian model especially those of Kaldor and Pasinetti
3. In third section, model used to generalized the economy with corporation
and stock exchange the pasinetti results that distribution determined by
capitalist’ but not worker’s saving

9. THE POST KEYNESIAN THEORY OF INCOME
DISTRIBUTION IN THE CORPORATE ECONOMY
4. The section four shows that Kaldor’s claim have to generalized the
pasinetti results is false although the expression for which he made that
claim is correctly derived and useful.
5. Section five is concerned with direction of economic causation implied
by the various post Keynesian models.
6. In section six, some purely formal aspects of the general post
Keynesian are considered and analytical.

10. POST KEYNESIAN EMPLOYMENT ANALYSIS
The post Keynesian theory is derived from the chapter “THE PRINCIPLES
OF EFFECTIVE DEMAND” where labour-hire demand is derived from an
effective demand point determined in the product markets.
The effective demand principle means that there is an “employment
function” relating alternate labour-hire decisions to alternate points of
effective demand. There is no aggregate demand for labour schedule with
the real wage the independent variable.