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Functional Finance and Full Employment: Lessons from Lerner for Today

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  • Mathew Forstater

    (The Jerome Levy Economics Institute)

Abstract

Recent global economic developments invite a reconsideration of orthodox macroeconomic theory and policy and encourage a revisiting of the ideas of unorthodox thinkers of the past. This paper reviews fifteen lessons to be learned from the work of Abba Lerner. These lessons, which fall under the general categories of functional finance and full employment, are as relevant today as they were when they were first put forward some five decades ago. They include insights into the workings of the macroeconomy that provide a basis for analyzing current macroeconomic developments and for formulating effective macroeconomic policies.

Suggested Citation

  • Mathew Forstater, 1999. "Functional Finance and Full Employment: Lessons from Lerner for Today," Macroeconomics 9908002, University Library of Munich, Germany.
    • Handle: RePEc:wpa:wuwpma:9908002
    Note: Type of Document - Acrobat PDF; prepared on IBM PC; to print on PostScript; pages: 17; figures: included
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:

    1. by J. Bradford DeLong in Grasping Reality with the Invisible Hand on 2019-03-27 18:38:12
    2. Examining an MMT model in detail
      by Noah Smith in Noahpinion on 2019-03-31 19:45:00

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    Cited by:

    1. Georgios Argitis & Stella Michopoulou, 2011. "Are Full Employment and Social Cohesion Possible Under Financialization?," Forum for Social Economics, Springer;The Association for Social Economics, vol. 40(2), pages 139-155, July.
    2. Standing Guy, 2012. "Why a Basic Income Is Necessary for a Right to Work," Basic Income Studies, De Gruyter, vol. 7(2), pages 19-40, January.
    3. Enrico Sergio Levrero, 2018. "Sulle critiche e gli ostacoli alla proposta dello Stato come "Occupatore di ultima istanza"," Working Papers 0035, ASTRIL - Associazione Studi e Ricerche Interdisciplinari sul Lavoro.
    4. Constantinos Alexiou & Joseph G. Nellis, 2017. "Cyclical Multiplier and Zero Low Bound Effects of Government Expenditure on Economic Growth: Evidence for Greece," Australian Economic Papers, Wiley Blackwell, vol. 56(2), pages 119-133, June.
    5. Vipul Bhatt & Andre R. Neveu, 2019. "Re-Thinking Debt Burden: Going with the Flow?," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 45(2), pages 179-203, April.
    6. Tanaka Yasuhito, 2024. "Budget Deficit in a Growing Economy and Impossibility of Fiscal Collapse: A Continuous Time Analysis," Central European Economic Journal, Sciendo, vol. 11(58), pages 305-319.
    7. Svartzman, Romain & Dron, Dominique & Espagne, Etienne, 2019. "From ecological macroeconomics to a theory of endogenous money for a finite planet," Ecological Economics, Elsevier, vol. 162(C), pages 108-120.
    8. Pavlina R. Tcherneva, 2008. "The Return of Fiscal Policy: Can the New Developments in the New Economic Consensus Be Reconciled with the Post-Keynesian View?," Economics Working Paper Archive wp_539, Levy Economics Institute.
    9. Yasuhito Tanaka, 2023. "Government deficit and “The World’s smallest macroeconomic model” by Paul Krugman," Financial Economics Letters, Anser Press, vol. 2(1), pages 44-53, September.
    10. Marc Audi & Amjad Ali, 2023. "Public Policy and Economic Misery Nexus: A Comparative Analysis of Developed and Developing World," International Journal of Economics and Financial Issues, Econjournals, vol. 13(3), pages 56-73, May.
    11. Mathew Forstater, 1999. "Introduction to Symposium on the European Economic and Monetary Union," Eastern Economic Journal, Eastern Economic Association, vol. 25(1), pages 31-34, Winter.
    12. Engin Oner, 2015. "Comparative Interpretation of Classical and Keynesian Fiscal Policies (Assumptions, Principles and Primary Opinions)," International Journal of Finance & Banking Studies, Center for the Strategic Studies in Business and Finance, vol. 4(2), pages 11-20, April.
    13. Fadhel Kaboub, 2011. "Understanding and preventing financial instability; Post-Keynesian Institutionalism and government employer of last resort," Chapters, in: Charles J. Whalen (ed.), Financial Instability and Economic Security after the Great Recession, chapter 4, pages 77-92, Edward Elgar Publishing.
    14. Faruk Ülgen, 2012. "Financial instability and functional finance : a Lerner-Minsky perspective," Post-Print halshs-00843754, HAL.
    15. Aloys L. Prinz & Hanno Beck, 2021. "Modern Monetary Theory: A Solid Theoretical Foundation of Economic Policy?," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 49(2), pages 173-186, June.
    16. John Henry, 2007. "“Bad” Decisions, Poverty, and Economic Theory: The Individualist and Social Perspectives in Light of “The American Myth”," Forum for Social Economics, Springer;The Association for Social Economics, vol. 36(1), pages 17-27, April.
    17. Hanan Aboel Farag & Mohamed Sayed Abed, 2017. "The Impact of Foreign Capital Inflows on Economic Growth and Employment in Egypt: A Sectoral Empirical Analysis," Working Papers 1152, Economic Research Forum, revised 11 Sep 2003.
    18. Pedro Leao, 2015. "Is a Very High Public Debt a Problem?," Economics Working Paper Archive wp_843, Levy Economics Institute.
    19. Zdravka, Todorova, 2009. "Employer of Last Resort Policy and Feminist Economics: Social Provisioning and Socialization of Investment," MPRA Paper 16240, University Library of Munich, Germany.
    20. Zdravka Todorova, 2013. "Connecting social provisioning and functional finance in a post-Keynesian–Institutional analysis of the public sector," European Journal of Economics and Economic Policies: Intervention, Edward Elgar Publishing, vol. 10(1), pages 61-75.
    21. Alexandre Chirat & Basile Clerc, 2023. "Convergence on inflation and divergence on price-control among Post-Keynesian pioneers: insights from Galbraith and Lerner," EconomiX Working Papers 2023-4, University of Paris Nanterre, EconomiX.
    22. José Luis Rey Pérez, 2018. "¿Cómo garantizar el derecho al trabajo? La alterantiva de la renta básica," Revista de Economía Crítica, Asociación de Economía Crítica, vol. 26, pages 51-65.
    23. Timothy Sharpe & Martin Watts, 2013. "Unconventional Monetary Policy in the UK: A Modern Money Critique," Economic Issues Journal Articles, Economic Issues, vol. 18(2), pages 41-64, September.
    24. Reynold F. Nesiba, 2013. "Do Institutionalists and post-Keynesians share a common approach to Modern Monetary Theory (MMT)?," European Journal of Economics and Economic Policies: Intervention, Edward Elgar Publishing, vol. 10(1), pages 44-60.

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    JEL classification:

    • E - Macroeconomics and Monetary Economics

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