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The State of Short-term Expectation

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  • M. G. Hayes

Abstract

The claim that Keynes makes a tacit assumption in Chapter 3 of The General Theory , that short-term expectations are fulfilled, is unwarranted and unnecessary. Kregel's seminal 1976 paper and its subsequent development by Chick and others have contributed to the general acceptance of this claim; these contributions are critically evaluated in the present paper. This critique clears the ground for a recognition that Keynes instead adopted the assumption of judicious foresight, which would now be called short-term rational expectations. That recognition in turn should encourage a reappraisal of Keynes's thought, by mainstream economists and others.

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File URL: http://hdl.handle.net/10.1080/09538259.2012.729929
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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal Review of Political Economy.

Volume (Year): 25 (2013)
Issue (Month): 2 (April)
Pages: 205-224

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Handle: RePEc:taf:revpoe:v:25:y:2013:i:2:p:205-224

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References

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  1. Roger Backhouse, 2004. "History and equilibrium: A partial defense of equilibrium economics," Journal of Economic Methodology, Taylor & Francis Journals, vol. 11(3), pages 291-305.
  2. John King, 1993. "Aggregate Supply and Demand Analysis Since Keynes: A Partial History," Working Papers 1993.16, School of Economics, La Trobe University.
  3. Dany Lang & Mark Setterfield, 2007. "History versus equilibrium? on the possibility and realist basis of a general critique of traditional equilibrium analysis," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 29(2), pages 191-209, January.
  4. Olivier Allain, 2006. "Effective demand and short-term adjustments in the General Theory," Cahiers de la Maison des Sciences Economiques bla06018, Université Panthéon-Sorbonne (Paris 1).
  5. Mark Hayes, 2007. "The Point of Effective Demand," Review of Political Economy, Taylor & Francis Journals, vol. 19(1), pages 55-80.
  6. Tony Lawson, 2005. "The (confused) state of equilibrium analysis in modern economics: an explanation," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 27(3), pages 423-444, April.
  7. Gary Mongiovi, 2000. "Shackle on Equilibrium: A Critique," Review of Social Economy, Taylor & Francis Journals, vol. 58(1), pages 108-124.
  8. Eleonora Sanfilippo, 2011. "The Short Period and the Long Period in Macroeconomics: An Awkward Distinction," Review of Political Economy, Taylor & Francis Journals, vol. 23(3), pages 371-388.
  9. Mark Hayes, 2006. "The Economics of Keynes: A New Guide to The General Theory," Books, Post Keynesian Economics Study Group (PKSG), number nggt.
  10. Claudio Sardoni, 2008. "Some considerations on equilibrium and realism," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 30(3), pages 485-490, April.
  11. M. G. Hayes, 2008. "Keynes's degree of competition," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 15(2), pages 275-291.
  12. Mark Hayes, 2011. "The State of Short-Term Expectation," Working Papers PKWP1107, Post Keynesian Economics Study Group (PKSG).
  13. Jochen Hartwig, 2007. "Keynes vs. the Post Keynesians on the Principle of Effective Demand," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 14(4), pages 725-739.
  14. Kregel, J A, 1976. "Economic Methodology in the Face of Uncertainty: The Modelling Methods of Keynes and the Post-Keynesians," Economic Journal, Royal Economic Society, vol. 86(342), pages 209-25, June.
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Cited by:
  1. M. G. Hayes, 2013. "The State of Short-term Expectation," Review of Political Economy, Taylor & Francis Journals, vol. 25(2), pages 205-224, April.

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