ABSTRACT
Recent developments in macroeconomics have sought to revive Keynesian explanations for fluctuations in output and employment by demonstrating that they represent responses of rational, maximizing individuals to economic shocks. This new Keynesianism thus attempts to overcome the criticism that Keynesian macroeconomics lacks adequate microfoundations. This chapter seeks to compare and contrast the New Keynesian economics with the work of Michal Kalecki. There are, I believe, some significant similarities between at least the resultant of Kalecki’s ideas on the financing of investment and some New Keynesian work on capital markets, though the foundations of each come from different sources and their implications I think go beyond what the New Keynesians realize. Kalecki’s theory will also help us evaluate and critique other aspects of New Keynesian economics.
