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

Abstract

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

Larson, Sven R., Austerity and Stagnation, Part 1: A Non-Walrasian Approach to Economic Stability (September 14, 2017). 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 . Available at SSRN: https://ssrn.com/abstract=3037141 or http://dx.doi.org/10.2139/ssrn.3037141

Sven R. Larson (Contact Author)

Independent ( email )

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United States

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