International Markets and Open Economy Macroeconomics: A Keynesian View.

This paper attempts to sketch a Keynesian response to the gap between the reality of international capital markets and the 'standard paradigm' of economic theory that underpins the policy model offered to poor countries in relation to their participation in the world economy and their national macroeconomic management. Recent work on imperfect markets, much of it from self-styled 'New Keynesian' point of view, implies a substantial modification of this standard paradigm to allow for non-price clearing but this does not appear to have been integrated with new trade theories, while the implications of systemic volatility and credit rationing behavior have not been theorized. The paper suggests that a return to Keynes's original approach to investor uncertainty and global demand might not only help to integrate international macroeconomic theory in a plausible manner but also contribute to the formulation of more desirable policy positions