Andrea Pacella

Fiscal policy in the monetary theory of production: an alternative to the "new consensus" approach

This paper provides an alternative view to the new consensus approach, from the standpoint of the monetary theory of production. It is shown that output growth is demand driven, so that fiscal policies, as well as direct state intervention above all in the labor market, are effective for increasing output and employment. This also applies to the current dynamics, particularly to the effects of the economic policy of the European Union, where, as will be shown, respect for the Maastricht parameters has contributed to determine poor macroeconomic performance.

THE EFFECTS OF LABOUR MARKET FLEXIBILITY IN THE MONETARY THEORY OF PRODUCTION

The aim of the present work is to study the effects of labour market flexibility on aggregate demand, productivity and employment within the theoretical framework of the Monetary Theory of Production. It is shown that labour market flexibility may not produce unidirectional effects on aggregate demand, productivity and employment, the working of the monetary market being decisive in establishing their levels.

The Keynesian Features of Graziani's Monetary Theory of Production and Some Unresolved Issues

Abstract The aim of this article is twofold. First, it seeks to verify the elements of affinity between Grazianis approach to the Monetary Theory of Production and Keynes’ Treatise on Money and his General Theory. It is shown that two important theoretical elements, from the Treatise on Money, enter Grazianis basic schema, namely the view of endogenous money supply and the distribution process. At the same time, uncertainty and aggregate demand—conceived as a crucial variable in the General Theory—can play a significant role in the basic schema of the Monetary Theory of Production. Second, the article sets out a critical reconstruction of Grazianis basic schema emphasising the existence of ‘open issues’– such as bank behaviour and the ‘paradox of profits’—relating to internal and external inconsistencies.

The Effects of Employment Insecurity on Demand, Productivity and Employment Levels

This paper investigates the effects of labour market deregulation on demand, productivity and employment levels in the short term. The focus will be on deregulation of labour contracts, i.e. on the transition from a legal system that guarantees permanent employment to a system of formal rules allowing for job insecurity. The idea is that the greater the deregulation of labour contracts, the higher the productivity and the lower the demand and employment levels.

Does fiscal policy affect the monetary transmission mechanism? A monetary theory of production (MTP) response to the new consensus macroeconomics (NCM) perspective

Drawing on the contributions of Augusto Graziani to the so-called monetary theory of production, this article aims to show that an accommodative monetary policy—as defended in the new consensus macroeconomics theory and supported by current practice around the world—has the maximum effect in stimulating aggregate demand and income when it is implemented in conjunction with a coordinated discretionary fiscal policy that boosts the demand for and the supply of loans via the reduction of the liquidity risk and the insolvency risk. As a result, the potentially beneficial effects of the traditional Keynesian fiscal multiplier are significantly amplified.

A Capital Controversy in Early Twentieth Century: Veblen vs. Clark

Abstract: This article aims to assess the debate between John Bates Clark and the “old” institutionalist scholars — Thorstein Veblen, above all — with particular reference to the nature of capital and the functioning of the labor market. Although studies on both authors are numerous, relatively little attention has been paid to finding the crucial elements at the heart of their radical disagreement. A.J. Cohen (2014) convincingly argues that Veblen’s attack on Clark is in the center of the capital controversy of the 1960s and 1970s. We propose an extension of this argument, based on the idea that Veblen’s attack on Clark follows three steps. First, Veblen defined capital in money terms and, at the same time, he saw it as the accumulated technological and institutional experience of a community. Second, insofar as capital cannot be reduced to a stock of physical goods, it is logically impossible to derive a function of the marginal labor productivity from the existing stock of capital. Third, insofar as the marginal productivity of labor cannot be measured, it follows that the equality between real wage and marginal labor productivity cannot logically hold. It also follows that, since it does not exist, this equality cannot be used as a basis for establishing that the equilibrium wage is a just wage.

Keynes’s "Treatise on Money" and the role of the State

This paper aims at providing a critical reconstruction of Keynes’s view on the links existing between public spending, interest rate, wages and employment, as formulated in his Treatise on Money . It will be argued that Keynes’s approach leads to a policy prescription which stresses the necessity of direct State intervention in supplying goods and services. This conclusion is derived from a circuitist interpretation of this work.