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Beyond the Natural Rate: Stephen Marglin on the Instability of Market Economies

  • Michael Woodford
Journal of Economic Literature
vol. 62, no. 1, March 2024
(pp. 294-316)
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Abstract

In Raising Keynes: A Twenty-First Century General Theory, Stephen A. Marglin offers a provocative reformulation of Keynes' theoretical framework, stressing the importance of modeling the dynamics of wage and price adjustment. This review explains and assesses Marglin's argument for the possibility of a persistent equilibrium in which goods and/or labor markets continue not to clear in the absence of active stabilization policy. It also compares Marglin's analysis with that of New Keynesian models, and shows that the two approaches are more similar than might be immediately evident.

Citation

Woodford, Michael. 2024. "Beyond the Natural Rate: Stephen Marglin on the Instability of Market Economies." Journal of Economic Literature, 62 (1): 294-316. DOI: 10.1257/jel.20221712

Additional Materials

JEL Classification

  • E12 General Aggregative Models: Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
  • E23 Macroeconomics: Production
  • E24 Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
  • E32 Business Fluctuations; Cycles
  • E41 Demand for Money
  • E52 Monetary Policy