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Effective Demand: Securing the Foundations - Symposium

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Author Info

  • Olivier Allain

    (Centre d’Economie de la Sorbonne)

  • Jochen Hartwig

    (KOF Swiss Economic Institute)

  • Mark Hayes

    (University of Cambridge)

Abstract

This Symposium consists of individual comments by three authors on papers previously published by the other two (Allain, 2009, Hartwig, 2007 and Hayes, 2007) on the topic of Keynes’s principle of effective demand as set out in The General Theory. The Symposium includes updated versions of PKSG working papers 1210, 1211 and 1212 together with an introduction by all three authors. As Allain puts it, there is a closure problem, in our understanding if not in The General Theory itself. Allain’s solution is to redefine effective demand so that it becomes the end point of a process of convergence of expectations on outcomes. Hartwig (following Chick, 1992, in particular) requires entrepreneurs to form a view about aggregate demand rather than simply their own industry price. Hayes retains Keynes’s definition of effective demand and price-taking firms but introduces a division of entrepreneurs between employers and dealers which is not explicit in Keynes’s text.

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File URL: http://www.postkeynesian.net/downloads/wpaper/PKWP1302.pdf
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Bibliographic Info

Paper provided by Post Keynesian Economics Study Group (PKSG) in its series Working Papers with number PKWP1302.

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Length: 48 pages
Date of creation: Apr 2013
Date of revision:
Handle: RePEc:pke:wpaper:pkwp1302

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Keywords: Keynes; effective demand; formation of expectations;

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References

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  1. Casarosa, Carlo, 1981. "The Microfoundations of Keynes's Aggregate Supply and Expected Demand Analysis," Economic Journal, Royal Economic Society, vol. 91(361), pages 188-94, March.
  2. Mark Hayes, 2011. "Effective Demand: Securing the Foundations," Working Papers PKWP1212, Post Keynesian Economics Study Group (PKSG).
  3. 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.
  4. Olivier Allain, 2009. "Effective Demand and Short-term Adjustments in the General Theory," Review of Political Economy, Taylor & Francis Journals, vol. 21(1), pages 1-22.
  5. Mark Hayes, 2007. "The Point of Effective Demand," Review of Political Economy, Taylor & Francis Journals, vol. 19(1), pages 55-80.
  6. 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.
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Cited by:
  1. Mark Hayes, 2011. "Effective Demand: Securing the Foundations," Working Papers PKWP1212, Post Keynesian Economics Study Group (PKSG).

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