Mr Keynes, the Classics and the new Keynesians: A suggested formalisation
The paper suggests a <italic>new Keynesian</italic> model of the <italic>General Theory</italic>. A reduced form entails a diagram with three curves relating employment and the real wage, which represent the two fundamental classical postulates and the principle of effective demand. This diagram illustrates better than <italic>IS-LM</italic> the generality of Keynes's theory, clarifying the distinction between voluntary and involuntary unemployment. Other significant features are the role of the distribution of expected interest rates among heterogeneous agents, whether dispersed or concentrated, in shaping the <italic>LM</italic> curve, as well as the role of wage competitiveness constraints as a foundation of Keynes's relative wage hypothesis.
Year of publication: |
2014
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Authors: | Ferreira, Rodolphe Dos Santos |
Published in: |
The European Journal of the History of Economic Thought. - Taylor & Francis Journals, ISSN 0967-2567. - Vol. 21.2014, 5, p. 801-838
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Publisher: |
Taylor & Francis Journals |
Saved in:
Online Resource
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