Financial Constraints and Market Failures: The Microfoundations of New Keynesian Macroeconomics - Hardcover

Hardcover

ISBN 10: 1858986257 ISBN 13: 9781858986258

Publisher: Edward Elgar Publishing Ltd, 1999

Synopsis

This innovative book shows how new Keynesian economics has reacted to the challenges of new classical economics. It argues that new Keynesian economists have responded positively to the challenge and strengthened the analytical power of their models.

The first part of the book offers a critical reconstruction of the two crucial strains developed in new Keynesian economics. Firstly, the analysis of nominal and real rigidities based on imperfect competition in markets and secondly the analysis of capital market imperfections based on information asymetries. The authors argue that the constraints and market failures of new Keynesian models need to be specified. In the second part they focus on the financial constraint of credit rationing, the market failure of unemployment equilibria and the links between financial constraints and the workings of the labour market in economic cycles. The analysis of this does not provide a solution to all the analytical problems of the new Keynesian framework, but assesses the strengths and weaknesses of new Keynesian economics. The authors suggest that new Keynesian economics has opened a promising path of research which could make a pathbreaking contribution to macroeconomic theory.

About this title

About the Author

Edited by Marcello Messori, Robert Schuman Centre for Advanced Studies, European University Institute, Italy

Edition details

• Publisher: Edward Elgar Publishing Ltd
• Publication date: 1999
• Language: English
• ISBN 10: 1858986257
• ISBN 13: 9781858986258
• Binding: Hardcover
• Number of pages: 256
• Editor: Messori Marcello