DP11807 Post Keynesian Dynamic Stochastic General Equilibrium Theory

Author(s): Roger E A Farmer
Publication Date: January 2017
Keyword(s): Dynamic Stochastic General Equilibrium Theory, Post Keynesian Economics
JEL(s): E12, E20
Programme Areas: Monetary Economics and Fluctuations
Link to this Page: www.cepr.org/active/publications/discussion_papers/dp.php?dpno=11807

This paper explains the connection between ideas developed in my recent books and papers and those of economists who self-identify as Post Keynesians. My own work is both neoclassical and "old Keynesian". Much of my published work assumes that people have rational expectations and that "animal spirits" should be modeled as a new fundamental. I adopt a general equilibrium framework to model the macroeconomy. But although I write from a neo-classical tradition the themes I explore in my published writing have much in common with heterodox economics. This paper explains the common elements between these seemingly disparate traditions. I make the case for unity between Post-Keynesian and General Equilibrium Theory under the banner of Post-Keynesian Dynamic Stochastic General Equilibrium Theory.