Alves, Ferrari and Paula: The Post Keynesian Critique of Conventional Currency Crisis Models

Alves, AJ, F Ferrari, and LF de Paula. 2000. The Post Keynesian critique of conventional currency crisis models and Davidson's proposal to reform the international monetary system. JOURNAL OF POST KEYNESIAN ECONOMICS 22, no. 2: 207-226.

Efficient market theory provides an account of financial crises that focuses on poorly performing economic fundamentals, whether or not speculators are herding or following their own rational behavior. This post-Keynsian approach is quite different in that it focuses on the impossibility of ever fully knowing what the fundamentals are, and thus not being able to ever fully adjudicate as to exactly how the causes of the financial crisis were fundamental related. Thus, speculation is a constant and foundational part of market activity as it is currently organized.