Angel Asensio

New-consensus macroeconomic governance in a Keynesian world, and the Keynesian alternative

The paper presents both the New Consensus and Keynesian equilibrium within the usual four competitive macro-markets structure. It gives theoretical explanations of the pernicious effects that the NCM governance, which has been designed for ergodic stationary regimes, brings about in Keynesian non-ergodic regimes. It put forward Keynesian principles of governance which include monetary, budgetary and fiscal instruments, and suggest new directions for the positive and normative analysis of macro-policies.

Rethinking economic growth

As Keynes pointed out, economic decisions and activity under uncertainty do not tend automatically to full capacity utilization. Firms in general cannot but adapt their output to expected demand. This chapter invites us to rethink economic growth as the result of the factors that make the firms more or less optimistic regarding future aggregate demand. This is because expected demand is the driving force of output, time after time, and commands innovation and capital accumulation that, in the long run, allow for higher output in spite of the demographic constraint.

Insights on endogenous money and the liquidity preference theory of interest

ABSTRACT It is argued that the debate between “structuralist” and “horizontalist” has long been obscured because of inadequate treatment, in both approaches, of the credit-money supply and of the total money supply. As a result, endogenous money models still have serious limitations today. On the one hand, the bank loan markup and the loan interest rate are exogenous in the horizontalist model, which supposes that they do not depend on the money/liquidity market conditions (as if bank loans did not compete with the existing liquidity). On the other hand, although interest rates are endogenous in the structuralist model, they result from inappropriate treatment of the loan supply and money/liquidity supply. This article aims to remove these shortcomings. It offers a theoretical framework and formal modeling where the creditworthy demand for loans determines the bank loan supply, given the central bank refinancing interest rate, while the total supply and demand for liquidity-money determines the markup and the market rate of interest in accordance with Keynes’s liquidity preference theory. In this framework, the post Keynesian theory of endogenous money and Keynes’s “verticalist” view prove to be analytically complementary.

Recognition of fundamental uncertainty as a key to the heterodox economics scientific supremacy

This paper argues that the mainstream lack of realism comes from its reduced definition of uncertainty. By contrast, the fundamental uncertainty is shown to be the reason why the notion of an optimum is deprived of objective foundation and therefore rational decisions cannot discard the influence of psychological and sociological factors. Fundamental uncertainty also is shown to be the very reason why competitive markets alone would be subject to indeterminacy and instability and therefore institutional stabilisers do tame the potentially destabilising market forces endogenously. In addition, fundamental uncertainty is shown to be the very reason why it is economically rational for social groups to struggle about income distribution and markets (de)regulation. As the recognition of fundamental uncertainty moreover is consubstantial with a realistic open system theorising where history and path dependence matter, it is argued that it is a key of the heterodox economics scientific supremacy, a basic ingredient from which, beyond/thanks-to its diversity, heterodox economics may develop realistic alternatives to the mainstream.