TY  - JOUR
AU  - YANG, Yang
PY  - 2024
TI  - Reassessment of Investment, Saving and Finance—A Review of the Debate Among Post-Keynesian Economists in the 1980s
JO  - Political Economy Quarterly
SN  - 2097-1516
SP  - 127
EP  - 150
VL  - 3
IS  - 2
AB  - This article examines the enduring debate sparked by Asimakopoulos′ 1983 paper Kalecki and Keynes on finance, investment and saving in post-Keynesian economic theory during the 1980s. The origins of this debate can be traced back to the liquidity preference-loanable funds controversy of the 1930s, wherein Keynes explicitly argued that finance is independent of saving, countering the view that interest rates are determined by credit supply and demand. While operating within different theoretical frameworks, Kalecki endorsed Keynes′s position. Nearly five decades later, Asimakopoulos revisited Keynes′s and Kalecki′s perspectives on investment finance, reasserting the connection between finance and saving. Post-Keynesian economists at the time emphasized that the crux of the matter lay not in saving but in liquidity. Although Asimakopoulos erroneously centered on saving over liquidity and overlooked the banking system′s role, his criticism regarding long-term interest rate dynamics was insightful. Asimakopoulos challenged the universal applicability of Keynes′s and Kalecki′s intuitions on interest rates, deeming them special cases building on Kaldor′s work. Subsequent to the 1980s debates, post-Keynesians gained a clearer understanding of the three interrelated components underlying Keynes′s and Kalecki′s investment finance analyses: the investment multiplier process, liquidity preferences, and endogenous money supply. Building on this, they further reflected on the robustness of Keynes′s and Kalecki′s conclusions which is the pivotal contribution of Asimakopoulos′s paper. This historical discussion informs current perspectives and debates surrounding the Chinese economy. Although Keynes′s and Kalecki′s Depression-era insights was somewhat oversimplified, reflecting on the views of these two economists is still relevant for comprehending China′s contemporary economic landscape.
UR  - https://doi.org/10.26599/PEQ2024.9310206
DO  - 10.26599/PEQ2024.9310206