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Beyond the Natural Rate: Stephen Marglin on the Instability of Market Economies

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  • Michael Woodford

Abstract

In Raising Keynes: A Twenty-First Century General Theory, Stephen A. Marglin offers a provocative reformulation of Keynes' theoretical framework, stressing the importance of modeling the dynamics of wage and price adjustment. This review explains and assesses Marglin's argument for the possibility of a persistent equilibrium in which goods and/or labor markets continue not to clear in the absence of active stabilization policy. It also compares Marglin's analysis with that of New Keynesian models, and shows that the two approaches are more similar than might be immediately evident.

Suggested Citation

  • Michael Woodford, 2024. "Beyond the Natural Rate: Stephen Marglin on the Instability of Market Economies," Journal of Economic Literature, American Economic Association, vol. 62(1), pages 294-316, March.
    • Handle: RePEc:aea:jeclit:v:62:y:2024:i:1:p:294-316
    DOI: 10.1257/jel.20221712
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    More about this item

    JEL classification:

    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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