The Evaluation of Post-Keynesian Economics A Comparative Analysis

Abstract

In this article, we will make a comparative analysis of the evaluation and the developments in the Post-Keynesian Economics and then give the properties of Post-Keynesian Economics in terms of their assumptions and methodology, and their macroeconomic models; later on we will discuss the current state of Post-Keynesian Economics, again based on a comparative analysis. Post-Keynesian Economics was developed in the mid ‘80s as a reaction not only against New Classical School but also against New Keynesian economists because the assumptions and hence the conclusions of the latter were not deemed Keynesian enough. Keynesian Economics was mainstream both in the USA and Europe, both in academic circles and in the field of implementation by governments and Central Banks from 1936 and WW II up to the ‘70s. The debate that took place during this period between Neo-Keynesian economists in the USA and Neo-Classical economists that led to the Neo-Classical Synthesis and the reaction of Orthodox Keynesian Economists in the UK to Neo-Classical Synthesis will be referred to later. Keynesian economics here embraces both Neo-Keynesian economists and Orthodox Keynesian economists as mainstream against the Traditional Classical and the Neo-Classical System. Today, we witness that at present New Keynesian School is more widespread and influential compared to Post-Keynesian. One possible reason is that the former school sprang up in the USA while the latter basically in the UK; and USA today is much more influential worldwide compared say to the times when Keynes lived. But this should not be the sole or even the major reason why Post-Keynesianism is less popular. The reason which would likely explain the difference in popularity is that in their normative value judgments Post-Keynesian economists assign a heavy weight to improving income distribution while New Keynesian economists, on the whole, are less concerned with this goal.