Post Keynesian economics

Post Keynesian theory, strongly influenced by Kalecki and Minski as well as Keynes, is a major current in modern political economy. This chapter sets out its underlying principles which establish the principle of effective demand: output and employment are determined by demand factors rather than supply conditions, in both the long run and the short run. It also outlines the fundamentalist Keynesian, Kaleckian and Minskyan variants of Post Keynesianism, distinguishing them all from 'Old Keynesian' and 'New Keynesian' theory. A brief discussion of methodological issues is followed by an account of Post Keynesian microeconomics and the theory of economic growth. Then comes a section on the most important questions relating to macroeconomic policy. The chapter concludes by considering the relationship between Post Keynesianism and Marxism in political economy.