Structural Change in Post Keynesian Monetary Theory: A Non-Compensatory Disequilibrium Framework

Abstract

Post Keynesian Economics has shifted away and even renegade from Keynes' original research program, i.e., the Unemployment Equilibrium thesis, endogenous money and liquidity preference determination of interest rate in which money and uncertainty play a fundamental part. This paper attempts to bring back the Keynesian counter-revolution spirit into Post Keynesian Monetary Theory by introducing a Non-Compensatory Disequilibrium Framework (NCDF) that allows structural breaks in budget constraints that lead to a model where Walras’ Law does not hold.