ABSTRACT
In this final chapter, we depart from the semistructural form of the Keynesian D (isequilibrium) AD-D (isequilibrium) ASmodel that we have so far considered. We extend this empirically oriented disequilibrium model towards a baseline structuralmodel ofKeynesian realmarkets disequilibriumcoupledwith aTobinian equilibrium approach to portfolio choice over a complete (though still narrowly defined) range of financial assets. We therefore now go on from a simple LM-(Liquidity preference Money supply) curve or Taylor rule representation of financial markets to a full portfolio approachwith both imperfect asset substitution and imperfect capital gains expectations. The intention is to demonstrate to the reader in this outlook on future work that such an enlarged range of financial markets becomes sooner or later a modeling necessity if one wants to do justice to what is in fact the role of financial markets in a modern capitalist economy. Moreover this chapter also demonstrates that such a more balanced, fairly advanced macromodel of the real-financial market interaction can still be treated analytically as far as steady states and their stability are concerned. In the following sections, wewill indeed be able to prove advanced stability propositions and we will also consider some instability scenarios that are very plausible from a Keynesian perspective.
