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Keynesian Economics and Price Theory

Re-orientation of a Theory of Monetary Economy. Advances in Japanese Business and Economics 7

By (author) Masayuki Otaki
Format: Paperback / softback
Publisher: Springer Verlag, Japan, Tokyo, Japan
Published: 9th Oct 2016
Dimensions: w 156mm h 234mm d 12mm
Weight: 322g
ISBN-10: 4431563911
ISBN-13: 9784431563914
Barcode No: 9784431563914
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Synopsis
This book reconstructs Keynesian macroeconomics so that it is compatible with the neoclassical dynamic microeconomic theory. This theory adopts three postulates: rational expectations, perfect price flexibility, and exclusion of the money in utility function (MIU). Based on the new theoretical finding that the Lucas model (1972) contains multiple equilibria, the author unifies Keynesian and monetarist theories within the same framework. The book applies the above basic theory to international macroeconomics and economic growth theory. New Keynesian theory contains logical inconsistencies: menu costs that have no close relationship with microeconomics and MIU, which implies that the money accumulated as wealth is never spent. These two assumptions do not proximate the real world. In this volume, the author discusses how various segregated theoretical approaches in macroeconomics relate to one another and proposes how to integrate them.

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