The core principle is non-neutrality of money within a monetary circular flow model where endogenous money creation and wage dynamics follow generalized exponential Phillips curve relationships tied to unemployment levels. The theory formalizes worker responses to employment rates as the sole primary variable changing in this specific stage, rejecting neoclassical assumptions that money remains neutral or that rational expectations allow for accurate future inflation prediction without external intervention. This concept belongs to behavioral finance and macroeconomic modeling domains specifically addressing financial instability and policy efficacy through tabular system dynamics rather than algebraic equations alone.
The core principle is non-neutrality of money within a monetary circular flow model where endogenous money creation and wage dynamics follow generalized exponential Phillips curve relationships tied …