A Reinterpretation of Chapter 17 of Keynes's General Theory: Effective Demand Shortage under Dynamic Optimization
AbstractThis article is an attempt to formalize Chapter 17 of Keynes's General Theory using a continuous dynamic optimization model with perfect foresight. I present two subjective interest rates: the time preference rate and the liquidity premium that, respectively, govern the consumption-saving and portfolio decisions. Under optimal household behavior, they are equalized to the market rate of interest. In the monetary economy described by Keynes, however, the equality can be inconsistent with the condition of market equilibrium, in which case persistent stagnation occurs. A new analytic method based on dynamic optimization is proposed as an alternative to IS-LM analysis. Copyright 2001 by American Economic Association.
Download InfoTo our knowledge, this item is not available for download. To find whether it is available, there are three options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
Bibliographic InfoArticle provided by Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association in its journal International Economic Review.
Volume (Year): 42 (2001)
Issue (Month): 1 (February)
Contact details of provider:
Postal: 160 McNeil Building, 3718 Locust Walk, Philadelphia, PA 19104-6297
Phone: (215) 898-8487
Fax: (215) 573-2057
Web page: http://www.econ.upenn.edu/ier
More information through EDIRC
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Ono, Y., 2001. "International Spillover of Economic Fluctuations:A Dynamic Optimization Approach," ISER Discussion Paper 0527, Institute of Social and Economic Research, Osaka University.
- Ryu‐ichiro Murota & Yoshiyasu Ono, 2012.
"Zero Nominal Interest Rates, Unemployment, Excess Reserves And Deflation In A Liquidity Trap,"
Wiley Blackwell, vol. 63(2), pages 335-357, 05.
- Ryu-ichiro Murota & Yoshiyasu Ono, 2009. "Zero Nominal Interest Rates, Unemployment, Excess Reserves and Deflation in a Liquidity Trap," ISER Discussion Paper 0748, Institute of Social and Economic Research, Osaka University.
- Ryu‐ichiro Murota & Yoshiyasu Ono, 2011.
"Growth, Stagnation And Status Preference,"
Wiley Blackwell, vol. 62(1), pages 122-149, 02.
- Yoshiyasu Ono & Katsunori Yamada, 2012.
"Difference or Ratio: Implication of Status Preference on Stagnation,"
ISER Discussion Paper
0856rr, Institute of Social and Economic Research, Osaka University, revised Jan 2014.
- Yoshiyasu Ono & Katsunori Yamada, 2012. "Difference or Ratio: Implication of Status Preference on Stagnation," ISER Discussion Paper 0856, Institute of Social and Economic Research, Osaka University, revised Mar 2013.
- Ryo Horii & Yoshiyasu Ono, 2005. "Financial Crisis and Recovery: Learning-based Liquidity Preference Fluctuations," Macroeconomics 0504016, EconWPA.
- Ken‐Ichi Hashimoto & Yoshiyasu Ono, 2011.
"Does Pro‐Population Policy Raise Per Capita Consumption?,"
The Japanese Economic Review,
Japanese Economic Association, vol. 62(2), pages 151-169, 06.
- Ken-ichi Hashimoto & Yoshiyasu Ono, 2007. "Does Pro-population Policy Raise Per Capita Consumption?," ISER Discussion Paper 0697, Institute of Social and Economic Research, Osaka University.
- Ryo Horii & Yoshiyasu Ono, 2004. "Learning, Liquidity Preference, and Business Cycle," ISER Discussion Paper 0601, Institute of Social and Economic Research, Osaka University.
- Yoshiyasu Ono, 2011.
"The Keynesian Multiplier Effect Reconsidered,"
Journal of Money, Credit and Banking,
Blackwell Publishing, vol. 43(4), pages 787-794, 06.
- Johdo, Wataru, 2009. "Habit persistence and stagnation," Economic Modelling, Elsevier, vol. 26(5), pages 1110-1114, September.
- repec:ebl:ecbull:v:5:y:2004:i:1:p:1-13 is not listed on IDEAS
- Ken-ichi Hashimoto, 2004. "Intergenerational Transfer and Effective Demand," Economics Bulletin, AccessEcon, vol. 5(1), pages 1-13.
- Ryuzo Miyao, 2002. "Liquidity Trap and the Stability of Money Demand: Is Japan Really Trapped at the Zero Bound?," Discussion Paper Series 127, Research Institute for Economics & Business Administration, Kobe University.
- Ono, Y., 2001. "Growth or Stagnation: Economic Consequences of Status Preference," ISER Discussion Paper 0524, Institute of Social and Economic Research, Osaka University.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing) or ().
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.