Pricing, price stability, and post Keynesian price theory

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Pricing, price stability, and post Keynesian price theory

Please use this identifier to cite or link to this item: http://hdl.handle.net/10355/14177

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Title: Pricing, price stability, and post Keynesian price theory
Author: Gu, Gyun Cheol
Date: 2012-05-15
Publisher: University of Missouri--Kansas City
Abstract: This dissertation contributes to heterodox microeconomics by building a comprehen- sive and coherent theoretical system for price cyclicality and stability since they are under-theorized issues in both neoclassical and heterodox microeconomics. In par- ticular, it develops an empirically grounded theory of price cyclicality and stability from the Post Keynesian perspective by examining the causal mechanisms for price setting which are supported by empirical evidence. By doing so, it sheds light on the mechanisms through which price stability is secured. The dissertation has four major implications for heterodox microeconomics. First, it demonstrates that there is no such thing as a deterministic relationship between sales and prices predicated on the neoclassical supply and demand framework. The relationship can appear to be positive, negative, or nil at all depending on how the cost base responds to the output change. Second, it demonstrates that it is not the pro t mark-up but the cost base that works as the key driver of price cyclicality, which means that all neoclassical explanations for price cyclicality have no foundation. Third, it refines the heterodox theory of intrinsic price stability by updating Lee's (1998) grounded price theory. Last but not least, it extends the heterodox price stability theory by di erentiating between intrinsic and extrinsic price stability, identifying their roles and implications and incorporating labor hoarding and discipline e ects to the theorization of the ex- trinsic price stability. All these contributions will be of crucial importance for the re nement and development of heterodox microeconomics.
URI: http://hdl.handle.net/10355/14177

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