Abstract
Recently, there have been several papers originating from Keynesian macroeconomic theory and Kalecki’s work on the business cycle that have attempted to integrate monetary and financial variables in macrodynamic models.1 This development seems to overcome the unfortunate separation of financial and real aggregate magnitudes present in macrodynamic modelling. Moreover, due to the emphasis given to the role of financial markets for macro fluctuations, the formation of expectations has again been stressed as an important aspect in determining asset holding and investment decisions that generate macroeconomic fluctuations.2 This chapter also seeks to make a contribution to this line of research. However, expectations or as we prefer to call them, a general state of confidence, will not be taken as given as in the Keynesian sense of ‘animal spirits’, but will be assumed as endogenous instead.
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© 1992 Dimitri B. Papadimitriou
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Franke, R., Semmler, W. (1992). Expectation Dynamics, Financing of Investment and Business Cycles. In: Profits, Deficits and Instability. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-11786-4_17
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DOI: https://doi.org/10.1007/978-1-349-11786-4_17
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