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Expectations, Employment and Prices: A Suggested Interpretation of the New «Farmerian» Economics

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  • Marco Guerrazzi

Abstract

This paper aims at providing a critical assessment of the New «Farmerian» economics, i.e., Farmer's attempt to provide a fresh micro-foundation of the General Theory grounded on modern search and business cycle theories with the goal of offering a rationale for finance-induced recessions. Specifically, I develop a model that summarizes the main arguments of the suggested approach by showing that a special importance has to be paid to the search mechanism, the choice of units and «animal spirits» modelling. Thereafter, referring to recent computational experiments, I discuss some possible empirical implications of the resulting framework. Finally, I put forward the lines for new theoretical and empirical developments by sketching the policy implications towards which the new Farmerian economics might lead.

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  • Marco Guerrazzi, 2012. "Expectations, Employment and Prices: A Suggested Interpretation of the New «Farmerian» Economics," Politica economica, Società editrice il Mulino, issue 3, pages 369-395.
    • Handle: RePEc:mul:je8794:doi:10.1429/74179:y:2012:i:3:p:369-395
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    18. Roger E.A. Farmer, 2008. "Old-Keynesian Economics," Chapters, in: Roger E.A. Farmer (ed.), Macroeconomics in the Small and the Large, chapter 2, Edward Elgar Publishing.
    19. Farmer, Roger, 2010. "Expectations, Employment and Prices," OUP Catalogue, Oxford University Press, number 9780195397901.
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    22. Marco Guerrazzi, 2010. "Stochastic Dynamics and Matching in the Old Keynesian Economics: A Rationale for the Shimer's Puzzle," Discussion Papers 2010/95, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
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    Cited by:

    1. Marco Guerrazzi & Paolo Gelain, 2015. "A demand-driven search model with self-fulfilling expectations: the new 'Farmerian' framework under scrutiny," International Review of Applied Economics, Taylor & Francis Journals, vol. 29(1), pages 81-104, January.
    2. Marco Guerrazzi, 2015. "Animal spirits, investment and unemployment: An old Keynesian view of the Great Recession," Economia, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics], vol. 16(3), pages 343-358.
    3. Marco Guerrazzi, 2023. "The Keynesian nexus between the market for goods and the labour market," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 70(2), pages 195-216, June.

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    More about this item

    Keywords

    Old keynesian economics; search; demand constrained equilibrium; Shimer puzzle; asset price stabilization.;
    All these keywords.

    JEL classification:

    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity

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