Thursday, January 16, 2014

Downward’s Pricing Theory in Post-Keynesian Economics: Chapter 1

Paul Downward’s Pricing Theory in Post-Keynesian Economics: A Realist Approach (Cheltenham, UK, 1999) is the second of two 1990s studies of Post Keynesian price theory.

Frederic Lee’s Post Keynesian Price Theory (Cambridge, 1998) was the first.

I will provide a chapter by chapter summary of this book in the way I did for Lee’s study (as can be read here)

In Chapter 1 (the introduction), Downward lays out his purpose and plan. He specifically adopts a Post Keynesian economic perspective and critical realist methodology (Downward 1999: 2–3).

Downward sees the essence of Post Keynesian economics as its emphasis on fundamental uncertainty, the crucial role of expectations in economic life, institutions, and the economy as a historical process (Downward 1999: 4).

A sketch of the chapters in Downward’s book follows:
(1) Chapter 2 discusses critical realism and the methodological consequences of critical realism;

(2) Chapter 3 is a critical review of Post Keynesian price theory;

(3) Chapter 4 surveys the econometric literature on pricing;

(4) Chapter 5 review a new econometric study;

(5) Chapter 6 reviews case studies on pricing;

(6) Chapter 7 brings in behavioural and organisational theory as relevant for pricing;

(7) Chapter 8 is a central chapter dealing with real causal processes that underlie price behaviour;

(8) Chapter 9 presents conclusions.
Downward, Paul. 1999. Pricing Theory in Post-Keynesian Economics: A Realist Approach. Edward Elgar Publishing, Cheltenham, UK and Northampton, MA.

Lee, Frederic S. 1998. Post Keynesian Price Theory. Cambridge University Press, Cambridge and New York.

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