On the Non-neutrality of Money Theory in Post-Keynesian Economics

The outstanding contribution of post-Keynesian economics is it develops the Keynesian ideas of uncertainty and non-neutrality of money into an integrated theoretical framework-non-neutrality of money.It stresses that money is a key factor in predetermining the real sector,both in the long and the short run.The post-Keynesian money theory adds financing demand to Keynesian theory of liquidity preference,which will inevitably lead to the contradiction between stocks and flows,thus causing the uncertainty and variability in interest rate.Besides,the theory analyzes the process of money creation from different angles and proposes the endogenous money supply theory.The theory is antagonistic to the quantity theory of money upheld by mainstream economics;therefore,it denies the concept that the capitalist economy will naturally keep full employment equilibrium.