Professor:            Dr. L. Randall Wray

                            Class Meets Monday 4-7pm, Royal 212
Office:                  202C Mannheim Hall
Office Hrs:         
Office Hours: M 1:30-2:30; W 2:30-3:30pm
Phone:                  235-5687 (note: don’t leave a message if I’m not in)
E-mail:       (Preferred way to reach me!)

Teaching Assistant: Yeva Nersisyan; Office Mannheim Hall 202A; Office Hours: M,W 1:30-3:30; phone 235-5999; email


J.M. Keynes, The General Theory (JMK-GT)

John King, A History of Post Keynesian Economics (King)

Robert Skidelsky, Keynes: the Return of the Master (Skidelsky)

Snowden & Vane, Modern Macroeconomics (SV); {note this is an advanced-intermediate text, for use as a reference}

L.R. Wray, Understanding Modern Money (LRW-UMM)


Most readings will come from JMK-GT, King, Skidelsky and journal articles; I will supply one copy of each required reading, which each student can copy (at her/his own expense). Xeroxes are kept in a file drawer outside my office. Note: due to budget cuts, please do not use the department’s copy machine! Many articles are available from,, or, and most are at: (, or on Professor Kelton’s website.  Alternatively, you can find many readings at the library. Please buy the books on-line as the bookstore probably will not have them in time.


Grading: there will be a midterm and a final exam. The midterm will be “open notes”; it will cover material through the seventh week. You can bring 1 page of notes (8 ½” by 11”, you can write on both sides). The final exam will be a “closed notes” exam; if we can get access to the computer lab, it will be taken on computers (as are the qualifying exams). Evaluation: participation and presentations (10%) + community service (5%) + midterm (35%) + final (40%) + homework (10%). Late work is devalued by 10%. Make-up exams are given only in the case of University-approved absence. The Final exam MUST be taken on the University-scheduled date. Most communication will be done via Blackboard email. The long version of the syllabus will be on Blackboard; you are responsible for reading it carefully.



COURSE OUTLINE (Partial list of readings, subject to revision) by week.



1.      Jan 11:  Introduction, Pre-Keynes Neoclassical thought


       JMK-GT Ch 1-2; SV Ch 1-2; Krugman: Introduction by Paul Krugman to The General Theory of Employment, Interest,   and Money, by John Maynard Keynes


2. Jan 18: Note: no class Jan 18, MLK B-Day. I suggest you try to read all of the GT by Jan 25.


3. Jan 25: Definitions, Ideas, Propensity to consume, Investment

JMK-GT Ch 3-14


4. Feb 1: Investment, Money, Interest, Money-Wages, Prices, Conclusion

JMK-GT Ch 15-24


5. Feb 8:  “Extensions” of Keynes, Growth Theory, Equilibrium and Disequilibrium approaches


S&V Ch 3, 11


Leijonhufvud: "Keynes and the Keynesians: a suggested interpretation"; "Keynes and the classics: two lectures", On

Keynesian Economics and the


Hicks: "Mr. Keynes and the Classics" (Econometrica 1937), "Some Questions of Time in Economics" (in Tang 1976), and "IS-LM: an explanation" (JPKE 1980-1)


Poole: "Optimal choice of monetary policy instruments in a simple stochastic macro model" (QJE 1970)


Friedman, B.: “Crowding out or crowding in? Economic consequences of financing government deficits” (Brookings Papers 1978)


      Foley: "On two specifications of asset equilibrium in macroeconomic models" (JPE 1975)


Solow, "A contribution to the theory of economic growth", QJE, 1956.


Domar, "Capital Expansion, rate of growth, and employment" Essays in the Theory of Economic Growth, 1957.

Apr 1946).


6. Feb 15: Monetarism, Mark I and II;


King Ch 1,3; SV Ch 4-5


Brunner: “The role of money and monetary policy” (FRB-St. Louis Review 1968)


Balbach: “How controllable is Money Growth?” (FRB-St. Louis Review 1981)


Friedman: "A monetary and fiscal framework for economic stability" (in Essays in Positive Economics, 1953), "The role of monetary policy" (AER 1968), and "Quantity theory of money" (in The New Palgrave, 1987)


Tobin: “Friedman’s Theoretical Framework” (in Milton Friedman’s Monetary Framework, ed. by Gordon, 1970)


Cooley and LeRoy, "Identification and estimation of money demand" (AER, 1981)


Sims: "Comparison of interwar and postwar business cycles: monetarism reconsidered" (AER 1980)


Lucas: "Expectations and the Neutrality of money" (JET 1972), "Econometric Policy Evaluation: a critique" (JME 1976)


Muth: "Rational Expectations and the Theory of Price Movements" (Econometrica 1961)


Sargent and Wallace: "Rational expectations, the optimal monetary instrument, and the optimal money supply rule" (JPE 1975)


Warren Samuels review of Leeson


7. Feb 22: Real Business Cycle, New Keynesian, Efficient Mkts, Summary of Orthodoxy


SV Ch 6, 7


King and Plosser: "Money, credit, and prices in a real business cycle" (AER 1984)


Plosser: "Understanding real business cycles" (JEP 1989)


Mankiw: "Real business cycles: a new Keynesian perspective" (JEP 1989)


Fama: “Efficient Capital Markets: A review of theory and empirical work”, The Journal of Finance, Vol. 25, No. 2, Papers and Proceedings of the Twenty-Eighth Annual Meeting of the American Finance Association New York, N.Y. December, 28-30, 1969 (May, 1970)


Bernanke: "Nonmonetary effects of the financial collapse in the propagation of the Great Depression" (AER 1983)


Greenwald and Stiglitz: “Keynesian, new Keynesian and new Classical Economics”, Oxford Econ Papers 39, 1987.


Greenwald, Stiglitz, and Weiss: "Informational imperfections in the capital market and macroeconomic fluctuations", AEA papers and proceedings, May 1984.


Caskey and Fazzari: “Macroeconomics and Credit Markets” (JEI 1986)


Gordon: "What is New-Keynesian Economics?" (JEL 1990)


Taylor: "Staggered wage setting in a macro model" (AER 1979)


Yellin: "Efficiency wage models of unemployment" (AER 1984)


Ben Friedman: "Lessons on monetary policy from the 1980s", JEP 1988.


Mankiw: "A quick refresher course in macroeconomics", JEL 28, Dec 1990.


Cassidy: "Interviews of Chicago Boys", The New Yorker, 2010


Etzioni: " Behavioral economics: A methodological note"



8. Mar 1: Review



9. *******************MIDTERM MARCH 8*******************************************



10. Mar 15: The Return of the Master; Intro to alternative interpretation of Keynes and Heterodoxy


 Skidelsky (all)


SV Ch 8-9, King Ch. 2


Chick: “Keynesians, Monetarists and Keynes: the end of the debate—or a beginning?” (in Post Keynesian Economic Theory, ed. by Arestis and by Arestis and Skouras)


Harcourt: “Post-Keynesianism: quite wrong and/or nothing new?” (in Post Keynesian Economic Theory, ed. by Arestis and Skouras),


Kregel: The Reconstruction of Political Economy (1973) (Especially Part Two)


Kregel: “Economic methodology in the face of uncertainty: the modeling methods of Keynes and the Post Keynesians” (EJ


Eichner and Kregel: "An essay on Post-Keynesian theory: a new paradigm in economics" (JEL 1975)


Boulding: A Reconstruction of Economics, 1950. (Skim especially Ch 2)



11. Mar 22:  Monetary theory of production; Essential properties of money; Liquidity Preference


Keynes: "The process of capital formation" (EJ 1939); “A monetary theory of production” (CW vol XIII, p. 408)


Dillard: “A monetary theory of production: Keynes and the Institutionalists” (JEI 1980), the Economics of John Maynard


Keynes: the theory of a monetary economy (1948)


Sawyer “The political economy of the Phillips curve”, (Thames Papers in Political Economy Summer 1987)


Davidson: “The demand and supply of labour” (in Post Keynesian Macroeconomic Theory 1994)


Davidson: “A Keynesian view of Friedman’s theoretical framework for monetary analysis” (in Milton Friedman’s Monetary

Framework, ed. by Gordon, 1970)


Wray: “Boulding’s Balloons”, JEI, 1990; “The monetary macroeconomics of Dudley Dillard” (JEI 1993); “Saving, profits and speculation in capitalist economies" (JEI 1991);


Peterson: “Macroeconomics and the theory of a monetary economy” (in Political Economy for the 21st Century (ed by Whalen 1996)


Cramp: “Two Views on Money” (Lloyd’s Bank Review 1962)


Davidson: Money and the Real World (1978), Post Keynesian Macroeconomic Theory (1994); "Money and the Real World" (EJ 1972)


      Wray: “Money, interest rates, and monetarist policy” (JPKE 1993)


      Keynes: "Alternative Theories of the rate of interest" (EJ 1937)


      Townshend: "Liquidity premium and the theory of value" (EJ 1937)


Tsiang: "Liquidity preference and loanable funds theories, multiplier and velocity analysis: a synthesis" (AER 1956)


Kregel: “The multiplier and liquidity preference: two sides of the theory of effective demand” in The Fundation of Keynesian Analysis (Barrere ed.) 1988


Wray: “Alternative theories of the rate of interest” (CJE 1992)


Samuels: “The present state of institutional economics” (CJE 1995)


King Ch 5,6


Spring Break Mar 29-Apr 4


12. Apr 5: The New Monetary Consensus, Endogenous Money, Horizontalism, Circuitiste


King Ch 8


Wray: “The Fed and the new monetary consensus”, Levy Institute Public Policy Brief #80.


Arestis and Sawyer: “Inflation Targeting”, Levy Working Paper #388.


LeHeron and Carre: “Credibility vs Confidence in Monetary Policy”, 2004.; LeHeron: "Alan Greenspan, the Confidence Strategy"


Moore:  “Contemporaneous reserve accounting: can reserves be quantity constrainted?” (JPKE 1984); “Wages, bank lending, and the endogeneity of money" (in Money and Macro Policy, ed. by Jarsulic); and “Money supply endogeneity” (JPKE 1991)


Pollin: “Two theories of money supply endogeneity” (JPKE 1991)


Cottrell: “Post-keynesian monetary economics” (CJE 1994)


Schumpeter: The theory of economic development (1949) (Read especially Ch 3)


Minsky: “Schumpeter: Finance and Evolution” (in Evolving Technology and Market Structure, ed. by Heertje and Perlman, 1990)


Minsky: "Schumpeter and finance" in Money and Institutions in Market Development (Biasco and Roncaglia eds.)


Bellofiore: “Money and development in Schumpeter” (RRPE 1985)


Graziani: “The theory of the monetary circuit” (Economies et Societes 1990)


Wray: “Government deficits, liquidity preference and Schumpeterian innovation” (Economies et Societes 1994); 


Lavoie: “Credit and money: the dynamic circuit, overdraft economics, and Post Keynesian economics” (in Money and

Macro Policy, ed. by Jarsulic 1985); “The endogenous flow of credit and the Post Keynesian theory of money” (JEI 1984)


Rousseas: “The spheres of industrial and financial circulation revisited” (Economies et Societes 1994)



13. Apr 12: Cambridge Economics, Capital Controversy, Long Run vs Short Run; Cycles; Marx


King Ch 4, 9; 7, 10, 11,12


      Garegnani: (Part A, B) “Notes on consumption, investment and effective demand”  (CJE 1978), “On a change in the notion of equilibrium in recent work on value and distribution” (in Keynes’s Economics and the theory of value and distribution, ed. by Eatwell and Milgate, 1983)


Eatwell: “Theories of value, output and employment”  (in Keynes’s Economics and the theory of value and distribution, ed. by Eatwell and Milgate, 1983)


Milgate and Eatwell: (Part A, B) “Unemployment and the market mechanism” (in Keynes’s Economics and the theory of value and distribution, ed. by Eatwell and Milgate, 1983)


Kregel: "Hamlet without the prince: Cambridge macroeconomics without money" (AER 1985)


Fan-Hung: “Keynes and Marx on the theory of capital accumulation, money and interest” (RES 1939)


Foley: “On Marx’s theory of money” (Social Concept 1 1983)


Gillman: Prosperity in Crisis (1965) (skim, especially Part I and Part II)


Wolfson: Financial Crises (1994) (skim, especially Ch 2-3; Ch11)


Kenway: “Marx, Keynes and the possibility of crisis” (in Keynes’s Economics and the theory of value and distribution, ed. by Eatwell and Milgate, 1983


Sherman "Endogenous and Exogenous Business Cycles Theories" in The Business Cycle by Sherman


14. Apr 19: Modern Money and Functional Finance; Sectoral Balances; PK theory of finance


Wray: Understanding Modern Money (1998) (Read especially Ch 4-5)


Wray:  “A Friedmanian Approach to Restoring Growth” CFEPS Working paper #22


Lerner: “Money as a creature of the state” (AER 1947); “Functional finance and the federal debt”  (Social Research, 1943)


      Bell/Kelton: “The role of the state and the hierarchy of money” Cambridge Journal, Mar 2001; “Do taxes and bonds finance government spending?” JEI, Sept 2000.


      Innes: “What is money?” (Banking Law Jnl, 30(5), May 1913); "The Credit Theory of Money" (Banking Law Jnl, 31(2), February 1914)


Knapp: The State Theory of Money 1924


Ingham: ‘Babylonian madness: on the historical and sociological origins of money’, in What is Money?, edited by John Smithin, 2000.


Goodhart: “The two concepts of money: implications for the analysis of optimal currency areas” (European jnl of Political Economy 1998)


Wray: “Deficits, Inflation and monetary policy” (JPKE 1997);


Raines and Leathers: “Veblenian stock markets and the efficient markets hypothesis” (JPKE Fall 1996)


Tymoigne: “Asset Prices, Financial Fragility and Central Banking” (Levy Working Paper 456)


Kregel: “Aspects of a Post Keynesian Theory of Finance” (JPKE Fall 1998)


Ritter, “The flow-of-funds Accounts: A New Approach” (Jnl of Finance, May 1963)


Godley: “Weaving cloth from Graziani’s thread…” Ch 8


Lavoie: “Circuit and coherent stock-flow accounting” Ch 9


Wray: "Alternative Approaches to Money", Theoretical Inquiries in Law, Vol. 11, No. 1, Jan. 2010


15. Apr 26: International Macroeconomics; Financial Crisis; Conclusion


SV Ch 12


Minsky: Stabilizing an Unstable Economy (1986); “The financial instability hypothesis: a restatement”, in Arestis and Skouras, Post Keynesian Economic Theory, 1985


Papadimitriou and Wray: “The economic contributions of Hyman Minsky: varieties of capitalism and institutional reform” Review of Political Economy 10(2) 1998


Papadimitriou and Wray: Introduction to Stabilizing an Unstable Economy (Minsky 2008)


Albert M. Wojnilower, Benjamin M. Friedman and Franco Modigliani : “The central role of credit crunches in recent financial history” (Brookings Papers 1980)


Harvey: Orthodox Approaches to Exchange Rate Determination: a survey (JPKE summer 1996)


Davidson: “Reforming the World’s Money” (JPKE 15(2) Winter 1992-3)


Wray: “The rise and fall of money manager capitalism” (Cambridge Jnl of Econ July 2009)


Wray “Seigniorage versus sovereignty” (manuscript))





 Readings for Economics 601