Please use this identifier to cite or link to this item: http://hdl.handle.net/2440/89902
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Type: Book chapter
Title: The scientific illusion of New Keynesian monetary theory
Author: Rogers, C.
Citation: The Oxford Handbook of Post-Keynesian Economics, 2013 / Harcourt, G., Kriesler, P. (ed./s), Ch.8, pp.167-187
Publisher: Oxford University Press
Issue Date: 2013
ISBN: 0195390768
9780195390766
Statement of
Responsibility: 
Colin Rogers
Abstract: It is shown that New Keynesian monetary theory is a scientific illusion because it rests on moneyless Walrasian general equilibrium microfoundations. Walrasian general equilibrium models require a Walrasian or an Arrow-Debreu auction, but this auction is a substitute for money and empties the model of all the issues of interest to regulators and central bankers. The New Keynesian model perpetuates Patinkin’s “invalid classical dichotomy” and is incapable of providing any guidance on the analysis of interest rate rules or inflation targeting. In its cashless limit, liquidity, inflation, and nominal interest rate rules cannot be defined in the New Keynesian model.
Keywords: Business & Economics
Description: Volume title: Theory and Origins
RMID: 0030024373
DOI: 10.1093/oxfordhb/9780195390766.013.0009
Appears in Collections:Economics publications

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