Austerity and Stagnation, Part 1: A Non-Walrasian Approach to Economic Stability
An abbreviated version of this paper will be presented at the Research Association for Interdisciplinary Studies Conference at Johns Hopkins University, October 16-17, 2017
19 Pages Posted: 19 Sep 2017
Date Written: September 14, 2017
Unlike the narrative in Walrasian economic theory, the real world is not one of perfect foresight. This paper replaces this axiom with fundamental uncertainty, as established in original Keynesian theory. Drawing on contributions from Shackle, Okun, Alchian and Davidson, this paper explores how sticky prices become carriers of confidence through time. The confidence-carrying property is applied to government, fiscal policy, austerity and macroeconomic stability.
Keywords: Macroeconomics, Keynesian theory, Price theory, Sticky prices, The welfare state, Austerity, Fiscal policy
JEL Classification: D01, D02, D4, E02, E12, E14, E3, E62, E65, H11
Suggested Citation: Suggested Citation