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Capacity Utilization, Inflation, and Monetary Policy: The Duménil and Lévy Macro Model and the New Keynesian Consensus

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Abstract

The article considers the adjustment toward long-run equilibrium within the Duménil and Lévy macro model, with modifications. Findings show that long-run convergence to fully adjusted positions with normal utilization is not achieved when a more realistic reaction function is proposed. Classical equilibrium occurs when a vertical Phillips curve is substituted, but the model is isomorphic to the “new consensus” model and to features of “new” endogenous growth theory.

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Authors
  1. Marc Lavoie
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  2. Peter Kriesler
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© 2016 Joseph Halevi, G. C. Harcourt, Peter Kriesler and J. W. Nevile

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Lavoie, M., Kriesler, P. (2016). Capacity Utilization, Inflation, and Monetary Policy: The Duménil and Lévy Macro Model and the New Keynesian Consensus. In: Post-Keynesian Essays from Down Under Volume IV: Essays on Theory. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-137-47529-9_29

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  • DOI: https://doi.org/10.1057/978-1-137-47529-9_29

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  • Publisher Name: Palgrave Macmillan, London

  • Print ISBN: 978-1-137-47528-2

  • Online ISBN: 978-1-137-47529-9

  • eBook Packages: Economics and FinanceEconomics and Finance (R0)

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