Loanable Funds vs. Endogenous Money: Krugman is Wrong, Keen is Right
Egmont Kakarot-Handtke, “Loanable funds vs. endogenous money: Krugman is wrong, Keen is right”, real-world economics review, issue no. 67, 09 May 2014, pp. 2-16
15 Pages Posted: 17 May 2014
Date Written: May 16, 2014
In his recent article, Keen resumes the debate with Krugman about the effects of debt upon the economy. It is hard to see how the question can be settled as long as all participants apply their idiosyncratic models. Hence the issue boils down, as Krugman rightly put it, to the deeper question: "how should one do economics." Sketched with a broad brush, the consensus is that Orthodoxy has failed and that Heterodoxy has no convincing alternative to offer. The conceptual consequence of the present paper is to restart from a firm common formal ground. This relocation makes the debate solvable.
Keywords: new framework of concepts, structure-centric, axiom set, consumption economy, debt, Profit Law, simulation, market clearing, budget balancing
JEL Classification: B59, E21, G00
Suggested Citation: Suggested Citation