ABSTRACT
The following article gives the reader a sense of the diversity and wide range of economic analysis within the school of thought called Post-Keynesian economics. Carvalho discusses five different models of short-run vs. long-run equilibrium. They point to the influence of all the schools of thought discussed in this reader on the development of Post-Keynesian economics.
The first two models presume a somewhat systematic movement over time from a short-run situation to a long-run equilibrium. In this way they incorporate more "classical" features in their interpretation of economic activity. The first is derived from the Sraffian model and depicts a static long-run "center of gravity" to which the economy converges. The second is a growth model that predicts a dynamic long-run equilibrium. The following three models focus less on movement toward a stable point and concentrate on the process of decision making and uncertainty in modeling the passage of time. The Kaleckian alternative seeks to explain cyclical economic behavior, rather than an end point. In it institutional behavior is incorporated as a salient feature of a capitalist economy. The fourth model relies heavily on the concepts of uncertainty in investment decisions; the long run is open to the influences of short-run expectations. The last model is the least determinate of all. In this Post-Keynesian interpretation, even the notion of a long-run situation becomes problematic because of the difficulty in predicting future events.
