Abstract:Before becoming the hallmark of macroeconomics à la Wynne Godley, the 'stock-flow' analysis was already developed in microeconomics and general equilibrium theory. Basically, the goal was to study the formation of economic plans and the determination of market prices when individuals were supposed to consume, produce, and hold commodities. It is acknowledged that Robert W. Clower was a central figure in this theoretical context. Yet, for both his contemporaries and for historians, his contributions remained essentially technical.No attention was paid to the theoretical project underlying the statics and dynamics analyses of his 'stock-flow' price theory. My paper aims to fill this gap. In light of his doctoral dissertation, I show that the elaboration of 'stock-flow' market models was part of a project aiming at offering sound microfoundations to a Keynesian business cycle model. I analyze the origins of this microfoundation program, trace its development, and discuss its fate.JEL codes: B2, E12, E32, D4
Robert W. Clower's article "The Keynesian Counter-Revolution: A Theoretical Appraisal" (1965) was central to the transformation of Keynesian macroeconomics since it contributed to the emergence of fixed-price models, in the 1970s. Despite this influence, no scholar has proposed to explain its origins. My paper aims to fill this gap. It is argued that Clower came to build his disequilibrium program of microfoundations after changing radically his views about the meaning and the nature of the 'Keynesian Revolution'. During a first research phase (1949-1957), Clower considered that Keynesian macroeconomics was compatible with market clearing and with Walrasian microfoundations. But he eventually moved away from these equilibrium and synthesis perspectives. During a second research phase (1958-1962), he came to conclude that Keynesian macroeconomics had to be rooted in a disequilibrium framework and could not be based on Walrasian microfoundations. Hence the existence of a volte-face. This volte-face is explained by putting the invariants of Clower's thought (i.e., his search for microfoundations adapted to Keynesian macroeconomics, and his concerns with unstable dynamics) in perspective with the contemporary developments in the disequilibrium macroeconomics of Don Patinkin, and in the non-tâtonnement economics of Frank Hahn and
Robert W. Clower's article "A Reconsideration of the Microfoundations of Monetary Theory" (1967) deeply influenced the course of modern monetary economics. On the one hand, it revealed the deadlocks of Don Patinkin's project to integrate monetary and Walrasian value theory. On the other hand, it was the fountainhead of the cash-in-advance models à la Robert J. Lucas (1980), one of the most widely used approaches to monetary theory since the 1980s. Despite this influence, there is no detailed study of Clower's (1967) project to integrate monetary and value theory. My paper aims to fill this gap. This is a difficult task since Clower never completed the monetary theory outlined in his 1967 article. To overcome this difficulty, I characterize the intellectual context from which Clower's (1967) contribution emerged and have recourse to a rational reconstruction of his project. This reconstruction is based on the analysis of published and unpublished materials, written by Clower before and after the 1967 article. Four conclusions are obtained. First, Clower (1967) intended to reorient Patinkin's program to integrate monetary and value theory. Second, this reorientation was prompted by Clower's (1965) influential search for disequilibrium microfoundations to Keynesian macroeconomics. Third, Clower's (1967) project was to formulate a disequilibrium monetary theory. Fourth, such a project failed because of Clower's (1965) approach to disequilibrium economics.
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