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Expectational and Portfolio-Demand Shifts in a Keynesian Model of Monetary Growth Fluctuations

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  • Greg Philip Hannsgen
  • Tai Young-Taft

Abstract

We develop a pair of models to show how non-ad-hoc shifts to expectational variables can be used to model tendencies toward crisis. In the Shackle model, as developed in the book Keynesian Kaleidics (1974), uncertainty can lead to a collapse in the marginal efficiency of investment and a jump in liquidity preference. In the Minsky version of the model, excessive private debt can lead to a financial collapse–again an endogenous breakdown in forces supporting growth. We extend the models to indicate how the dynamics of inflation and distribution affect the dynamics.

Suggested Citation

  • Greg Philip Hannsgen & Tai Young-Taft, 2021. "Expectational and Portfolio-Demand Shifts in a Keynesian Model of Monetary Growth Fluctuations," Working Papers PKWP2112, Post Keynesian Economics Society (PKES).
    • Handle: RePEc:pke:wpaper:pkwp2112
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    References listed on IDEAS

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    More about this item

    Keywords

    Post Keynesian macro model; Poisson model of financial fragility; Keynesian dynamics; Hyman Minsky; G.L.S. Shackle; Keynesian Kaleidics; endogenous MEI and liquidity preference; financial fragility hypothesis;
    All these keywords.

    JEL classification:

    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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