Abstract This paper develops a New Keynesian model featuring financial intermediation, short- and long-term bonds, credit shocks, scope for unconventional monetary policy. The log-linearized reduces to four equations: Phillips IS curves, as well policy rules the short-term interest rate central bank's long-bond portfolio (QE). Credit shocks QE appear in both curves. In equilibrium, optimal enta...

In class, I focus on explaining the Keynesian model in words and with diagrams. I don’t walk through the underlying math, mainly because most students find diagrams easier to follow. However, going through the math at least once – at your own pace – will help you better understand the diagrams and how to use them correctly; and some students may find the math easier than the diagrams, or useful...

While the mainstream policies can not be surpassed in the enchanted ‘optimizable’ world, (Post) Keynesians have to resign themselves to manage without magic wand in the uncertain real world. The paper discusses the monetary rules proposed in the recent Post Keynesian literature. It argues that the long-term interest rate is too imperfectly controlled for such rules being feasible. Consequently,...

As Paul Samuelson once put it: Adam Smith is dead and Keynes is dead; well— and Mises is dead, too. But Keynesianism is alive and well and back with a vengeance. Built on solid neoclassical foundations, this “new” Keynesianism, which features the effects of nominal rigidities in the presence of economic shocks and the existence of involuntary unemployment, represents the theoretical core of mod...