Aggregate Demand and Finance: A Post Keynesian Short Period Macro Model

Abstract

The previous eight chapters have examined the foundational components of Post Keynesian macroeconomic analysis. This examination covered a range of issues including the nature of demand equilibrium (Chapter 3), the inability of generalized nominal wage and price level adjustment to necessarily secure full employment (Chapters 4 and 5), the theory of aggregate supply based on producers’ expectations of aggregate demand (Chapter 5), the problem of expectations in an uncertain world (Chapter 6), and the endogenous nature of money and finance (Chapters 7 and 8). The current chapter serves to unify these elements of analysis in a coherent macroeconomic model that describes the determination of short period equilibrium.¹