Post-Keynesian economics

Post-Keynesian economics is a school of thought that develops Keynes’s emphasis on fundamental uncertainty, effective demand, and historical time. It treats money, institutions, and distribution as central to economic outcomes.

Fundamental uncertainty: Uncertainty about future events that cannot be reduced to calculable probabilities. It underpins the school’s account of decisions made without reliable forecasts.
Multiplier effect: The process by which an initial change in spending produces a larger change in total income. It shows how autonomous expenditure can sustain output through successive rounds of income and spending.
John Maynard Keynes: A British economist whose work transformed theories of money, employment, and aggregate demand. His emphasis on uncertainty and demand is the school’s central point of departure.
Neoclassical economics: An economic tradition that analyzes choices and markets using optimization, scarcity, and equilibrium. Post-Keynesians reject its standard assumptions of predictable expectations and automatic market clearing.
Fiscal policy: Government decisions about taxation and spending used to influence economic activity. Post-Keynesians use it to support demand when private spending is insufficient.
Effective demand: The level of spending that determines firms’ production and employment decisions. It explains why output can remain constrained by spending rather than productive capacity.
Investment-saving identity: The national-income accounting relation in which realized investment equals realized saving. It reverses the causal story that prior saving must finance investment.
Joan Robinson: A British economist known for work on imperfect competition, capital theory, and Keynesian economics. She helped establish the Cambridge strand and defended Keynes’s radical implications.
New Keynesian economics: A macroeconomic school that uses optimizing models to explain short-run effects of rigid prices and wages. Despite the shared Keynesian name, it retains much of the neoclassical framework Post-Keynesians criticize.
Full employment: A condition in which people seeking work can find jobs, apart from normal transitions between jobs. The school treats sustained employment as a policy outcome, not an automatic market result.

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