Keynes introduces the term 'effective demand' in chapter 3 of the General Theory as designating the point of intersection of two functions: the 'aggregate demand function' (D) and the 'aggregate supply function' (Z). For the first time in the literature, I here specify exact functional forms for...

This paper shows that nominal price rigidity can arise from a failure to coordinate price changes. If a firm's desired price is increasing in others' prices, then the gains to the firm from adjusting its price after a nominal shock are greater if others adjust. This "strategic complementarity"...

We propose a fresh way of thinking about the monetary transmission mechanism. By integrating Keynesian economics with general equilibrium theory in a new way, we provide an alternative model and an alternative narrative to New-Keynesian economics to explain how macroeconomic policy influences...