MACROECONOMICS 2: HETERODOX MACROECONOMICS

Prof. Amitava Krishna Dutt

2017
FLACSO, Quito

Preliminary 4/28/2017

Course description
This course is intended to provide an introduction to heterodox macroeconomics.

It first compares elements of orthodox or mainstream macroeconomics and heterodox

macroeconomics, distinguishing between different dimensions of macroeconomics to examine
some of the main ideas of heterodox macroeconomics. It then examines the relation between
macroeconomics and macroeconomics and discusses some heterodox approaches to micro-
behavior.

Requirements
Students are required to write a short research paper (around 15-20 pages in length) and pass an
exam. Each of these will be worth 50 per cent of the total grade. The dates of the exam and for
when the paper is due will be announced later.

Syllabus and Reading List

I. Varieties of orthodox and heterodox macroeconomics

*Dutt, Amitava K. Dimensions of pluralism in economics, Review of Political Economy,

forthcoming.

Lawson, Tony, The nature of heterodox economics, Cambridge Journal of Economics 2006,
30, 483505

Dequech, David (2007-8). Neoclassical, mainstream, orthodox, and heterodox economics,

Journal of Post Keynesian Economics / Winter 20078, Vol. 30, No. 2.

*Dutt, Amitava K. and Amadeo, Edward J. Keynes's Third Alternative? The Neo-Ricardian
Keynesians and the Post Keynesians, Aldershot: Edward Elgar, 1990.

*Lavoie, M. Post-Keynesian Economics: New Foundations, Cheltenham: Edward Elgar, 2014,

chap. 1.

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*Dutt, Amitava K. Uncertainty, power, institutions and crisis: Implications for the future of
capitalism, Review of Keynesian Economics, 3(1), 2015, 9-28.

II. Microeconomics and macroeconomics

*Lavoie, M. Post-Keynesian Economics: New Foundations, Cheltenham: Edward Elgar, 2014,

chap. 2.

Kahneman, Daniel and Amos Tversky Judgment under heuristics, Science, September, 1974.

*Simon, H. A. "From substantive to procedural rationality" in Latsis, S. J., ed., Method and
Appraisal in Economics, Cambridge University Press, 1976, reprinted in Simon, H. A. Models of
Bounded Rationality, Vol 2, MIT Press, 1982.

Davidson, Paul, Is probability theory relevant for uncertainty? A Post Keynesian perspective,
Journal of Economic Perspectives, 5(1), Winter 1991, 129-43.

*Keynes, J. M. The General Theory of Employment, Interest and Money, Macmillan, 1936, chap
12.

*Keynes, J. M. "The General Theory of Employment", Quarterly Journal of Economics,

February 1937

III. Output, employment, distribution and the price level

*Keynes, J. M. The General Theory of Employment, Interest and Money, Macmillan, 1936,
chaps. 1, 2, 3, 5, 10, 11, 18, 19.

*Kalecki, M. Selected Essays on the Dynamics of the Capitalist Economy, Cambridge University
Press, 1971, chaps. 5, 6, 7, 8, 10

Taylor, Lance, Reconstructing Macroeconomics: Structuralist proposals and critiques of the

mainstream, Cambridge, Mass: Harvard University Press, 2004, chap. 4.

Marris, R., "An introduction to theories of corporate growth", in R. Marris and A. Wood, The
corporate economy, Harvard, 1971.

*Lavoie, M. Post-Keynesian Economics: New Foundations, Cheltenham: Edward Elgar, 2014,

chap. 5.

IV. Credit, money and finance

Moore, B. J. Horizontalists and Verticalists, Cambridge University Press, 1988.

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*Lavoie, Marc, Post-Keynesian Economics: New Foundations, Cheltenham: Edward Elgar,
2014, chap. 4.

Wray, L. Randall, Alternative theories of the interest rate, Cambridge Journal of Economics,
16, 69-89.

Minsky, Hyman, Capitalist financial processes and the instability of capitalism, Journal of
Economic Issues, 14(2), June 1980.

Minsky, Hyman, Stabilizing an unstable economy, Yale, 1986, chapters 8 and 9.

Taylor, Lance and S A OConnell (1985). A Minsky crisis, Quarterly Journal of Economics

V. Capital accumulation, growth and distribution

Harrod, R., "An Essay in Dynamic Theory", Economic Journal, 1939.

*Robinson, J. Essays in the Theory of Economic Growth, Macmillan, 1962, Chap 2.

Foley, Duncan and Tom Michl (1999). Cambridge, MA: Harvard University Press.
, chapter 6

*Dutt, A. K. Growth, Distribution and Uneven Development, Cambridge: Cambridge University

Press, 1990, Chaps. 2, 3, 5.

*Marglin, Stephen A. Growth, distribution and inflation - a centennial synthesis, Cambridge

Journal of Economics, 8(2), June 1984, 115-44.

*Kalecki, M. Selected Essays on the Dynamics of the Capitalist Economy, Cambridge:

Cambridge University Press, 1971, Chap. 10.

Lavoie, M. Foundations of Post-Keynesian Economic Analysis, Aldershot: Edward Elgar, 1992,

chap. 6.

*Dutt, A. K. "Stagnation, Income Distribution and Monopoly Power", Cambridge Journal of

Economics, March 1984

*Kaldor, N. "Alternative Theories of Distribution", Review of Economic Studies, 1955-6.

*Bhaduri, A. and Marglin, S. "Unemployment and the real wage: the economic basis for
contesting political ideologies", Cambridge Journal of Economics, December 1990.

*Taylor, Lance, Reconstructing Macroeconomics: Structuralist proposals and critiques of the

mainstream, Cambridge, Mass: Harvard University Press, 2004, chaps. 5, 11.

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*Pasinetti, L. "Rate of Profit and Income Distribution in Relation to the Rate of Economic
Growth", Review of Economic Studies, 1961-62, repr. in Pasinetti, Growth and Income
Distribution, Cambridge, 1974.

*Darity, William A., Jr., "The Simple Analytics of Neo-Ricardian Growth", American Economic
Review, Dec. 1981.

*Dutt, Amitava K. Growth, Distribution and Capital Ownership: Kalecki and Pasinetti
Revisited, in Economic Theory and Policy, B. Datta, S. Gangopadhyay, D. Mookherjee, and D.
Ray, eds., Delhi: Oxford University Press, 1990, p. 130-45.

*Assous, Michael and Dutt, Amitava, Growth and income distribution with the dynamics of
power in labor and goods markets, Cambridge Journal of Economics, 2013.

VI. Technological change, growth and distribution

*Dutt, Amitava Krishna,. Aggregate demand, aggregate supply and economic growth,
International Review of Applied Economics, 20(3), July 2006, 319-336.

Kaldor, N. "A Model of Economic Growth", Economic Journal, Dec 1957, repr. in N. Kaldor,
Essays on Economic Stability and Growth, Free Press.

*Taylor, L. Income Distribution, Inflation, Growth, Cambridge, Mass: MIT Press, 1991, chaps
10.1, 10.2, 11.3

VII. Inflation, finance, debt and growth

Taylor, L. Structuralist Macroeconomics, Basic Books, 1983, chaps 5, 6

*Taylor, L. Income Distribution, Inflation, Growth, Cambridge, Mass: MIT Press, 1991, chaps.
4, 5, 6

Taylor, Lance, Reconstructing Macroeconomics: Structuralist proposals and critiques of the

mainstream, Cambridge, Mass: Harvard University Press, 2004, chap. 7, 8.

Marglin, S. Growth, distribution and prices, Harvard, 1984, Chap. 20.

*Dutt, A. K. Growth, Distribution and Uneven Development, Cambridge: Cambridge University

Press, 1990, Chap. 4.

*Dutt, Amitava K. Maturity, stagnation and consumer debt: a Steindlian approach,

Metroeconomica, 57(3), August, 2006, 339-64.

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Hein, Eckhard and Till van Treeck Financialization in post-Keynesian models of distribution
and growth in M. Setterfield, ed., Handbook of Alternative Theories of Economic Growth,
Elgar.

VIII. Cycles

*Kaldor, Nicholas (1940). A model of the trade cycle, Economic Journal.

*Goodwin, Richard M. (1967) A Growth Cycle, in C. H. Feinstein, ed., Socialism, Capitalism

and Economic Growth, Cambridge: Cambridge University Press.

*Skott, Peter (1989). Conflict and effective demand in economic growth, Cambridge University
Press.

*Dutt, Amitava K.. Conflict inflation, distribution, cyclical accumulation and crises, European
Journal of Political Economy, Vol. 8(4), December, 1992, 579-97.

Taylor, Lance, Reconstructing Macroeconomics, Harvard University Press, 2004, chapter 9

IX. Sectoral issues and development

*Dutt, A. K. "Sectoral balance in development: a Survey" World Development, 1990.

*Dutt, A. K. Growth, Distribution and Uneven Development, Cambridge: Cambridge University

Press, 1990, Chaps. 6, 7.

*Taylor, L. StructuralistMacroeconomics, Basic Books, 1983, chaps. 3.1, 3.2, 9.1, 9.2

Taylor, L. Income Distribution, Inflation, Growth, Cambridge, Mass: MIT Press, 1991, chaps.
9.1, 9.2, 11.2.

Dutt, A. K. "A Kaldorian model of growth and development revisited", Oxford Economic
Papers, 1992.

Ros, Jaime, Development Theory and the Economics of Growth, Ann Arbor: University of
Michigan Press, 2000, chaps. 3, 4, 10.

*Auty, Richard, Natural resources and development, in A. K. Dutt and J. Ros, eds.,
International Handbook of Development Economics Vol 1, Edward Elgar, 2008.

*Tokman, Victor E. The informal sector in A. K. Dutt and J. Ros, eds., International
Handbook of Development Economics Vol 1, Edward Elgar, 2008.

X. Open economy issues and the global economy

Taylor, L. Structuralist Macroeconomics, Basic Books, 1983, chap. 7, 8, 10.

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Taylor, L. Income Distribution, Inflation, Growth, Cambridge, Mass: MIT Press, 1991, chaps. 7,
8, 9.5, 9.6

Blecker, R. "International competition, income distribution and economic growth", Cambridge

Journal of Economics, September 1989.

Ros, J. "Foreign exchange and fiscal constraints on growth", in Dutt, A. K., ed., New Directions
in Analytical Political Economy, Edward Elgar, 1992.

Singer, Hans (1950). The Distribution of Gains between Investing and Borrowing Countries.
American Economic Review, Papers and Proceedings, May, 473-85.

Myrdal, Gunnar (1957). Regional and international economic inequalities, chaps III and V, Rich
Lands and Poor Lands, New York: Harper Brothers, pp. 23-38; 50-66.

Dutt, Amitava K. Growth, distribution and uneven development, Cambridge, 1990, Chaps. 8-10.

Findlay, Ronald (1980).The Terms of Trade and Equilibrium Growth in the World Economy,
American Economic Review, June 1980, 291-9.

Krugman, Paul, Trade, Accumulation, and Uneven Development, Journal of Development

Economics, 8(2), 1981, 149-61.

Dutt, Amitava K. Southern primary exports, technological change and uneven development,
Cambridge Journal of Economics, Vol. 20, No. 1, January 1996, 73-89.

Dutt, Amitava K. Thirlwalls law and uneven development, Journal of Post Keynesian
Economics, Spring, 2002, 23(3), 367-90.

XI. Macroeconomic policy and political economy

Dutt, Amitava K. Government spending, aggregate demand and economic growth, Review of
Keynesian Economics, Vol. 1, No. 1, Spring 2013, 105-119.

You, Jong-Il and Dutt, Amitava K. Government debt, income distribution and growth,
Cambridge Journal of Economics, Vol. 20, No. 3, May 1996, 335-51.

Kalecki, M. Selected essays on the dynamics of the capitalist economy, Cambridge University
Press, 1971, chap. 12: `Political aspects of full employment'.

Polanyi, Karl (1944). The great transformation, The political and economic origins of our time,
Reinhart.