Routledge Handbook of Macroeconomic Methodology

18 Post-Keynesian methodology

John E. King

DOI: 10.4324/9781315745992-22

Introduction

Post-Keynesian economics is a dissident school in macroeconomics based on a particular interpretation of John Maynard Keynes’s General Theory, also involving some distinctive and controversial policy positions. It has several core propositions that distinguish it from both ‘Old’ and ‘New Keynesian’ theory (King 2015, Chapters 2–3). First, aggregate employment is determined in the product market, not the labour market, so that unemployment is essentially a macroeconomic problem that cannot be reduced to microeconomics. Second, involuntary unemployment exists, and it is caused by deficient effective demand; it would not be eliminated even if all labour market ...