Neoclassical Economics and Domain Assumptions

How the learned practice sophistry

by Joe Blackwell

A recent paper authored by two mainstream neoclassical economists [1], Salomon Faure and Hans Gersbach, has caused quite a stir amongst prominent heterodox economists such as Steve Keen and Richard Murphy. The paper seeks to compare and contrast two opposing models of commercial bank lending behaviour (endogenous money model and loanable funds model). Continue reading “Neoclassical Economics and Domain Assumptions”

Does Stimulus Spending Work?

The Case against Ricardian Equivalence

by Joe Blackwell

Today the use of fiscal policy (expanding government spending or reducing taxes) to stimulate GDP growth in times of recession has become one of the most controversial policy areas of modern macroeconomics. For those who favour free market based solutions, commonly known as neoliberals, interventionist fiscal policy is inherently wasteful and distorts the processes of the market system. On the other side of the debate are the various groups of Keynesians who see fiscal policy as a crucial stabilisation tool to prevent the economy entering a deep and prolonged recession. Continue reading “Does Stimulus Spending Work?”