This book reconstructs Keynesian macroeconomics so that it is compatible with the neoclassical dynamic microeconomic theory. This theory adopts three postulates: rational expectations, perfect price flexibility, and exclusion of the money in utility function (MIU). Based on the new theoretical finding that the Lucas model (1972) contains multiple equilibria, the author unifies Keynesian and monetarist theories within the same framework. The book applies the above basic theory to international macroeconomics and economic growth theory. New Keynesian theory contains logical inconsistencies: menu costs that have no close relationship with microeconomics and MIU, which implies that the money accumulated as wealth is never spent. These two assumptions do not proximate the real world. In this volume, the author discusses how various segregated theoretical approaches in macroeconomics relate to one another and proposes how to integrate them.
Chapter 1 Introduction.- Part 1 Keynesian Economics and Price Theory.- Chapter 2 Price Theory in a Monetary Economy.- Part 2 Applications to Labor Economics and Inflation Theory.- Chapter 3 The Existence of an Involuntary Unemployment Equilibrium.- Chapter 4 The Phillips Curve and Inflation Theory Reconsidered.- Part 3 Applications to International Economics.- Chapter 5 A Basic Model of a Flexible Exchange Rate System under Perfect Capital Mobility.- Chapter 6 The Functions of a Key Currency: International Liquidity Provision and Insurance.- Chapter 7 On the Necessity of Optimum Currency Areas: The Case for Perfect Capital Mobility and Immobile Labor Forces.- Chapter 8 Universal Discipline or Individual Discipline: On the Viability of the Eurozone as a Nonadjustable Local Fixed Exchange Rate Regime.- Chapter 9 Industrial Hollowing Under a Flexible Exchange Rate System .- Chapter 10 On the Function of Gold Standard in Idealism and Reality.- Part 4 Applications to Economic Growth Theory.- Chapter 11 Dexterity as a Source of Economic Growth.- Chapter 12 Monetary Economic Growth Theory under Perfect Competition: Can Monetary Expansion Really Enhance Economic Growth?.- Chapter 13 A Keynesian Monetary Growth Model under Monopolistic Competition: Is Economic Growth Sustainable without Government Help?.- Part 5 Critiques of the Existing Monetary Theories.- Chapter 14 A Critique of Lucas' Theory.- Chapter 15 Does the Search Model Succeed in Describing a Monetary Economy?.
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