Keynes’s slip of the pen: aggregate supply curve vs employment function
AbstractThis paper focuses on Keynes’s exposition of the Principle of Effective Demand and its generalised mathematical representation – the basis of a Z-D type model. It elaborates on Keynes’s algebraic formulation in the General Theory, relying on interpreters who contributed to the generalisation of his most restrictive hypotheses on competition and returns to scale as well as on those who developed the algebraic argumentation that Keynes left only indicated. Instead of correcting Keynes’s mathematics (which is right), the paper concludes that there has been a “slip of the pen” in his own description of these concepts on the footnote to page 55 of the General Theory. Keynes’s employment function, the inverse of his aggregate supply curve is not the same thing as his aggregate supply function. Therefore, in the controversial footnote, it is not the aggregate supply function but the employment function that is linear with a slope given by the reciprocal of the money-wage.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 12837.
Date of creation: 18 Jan 2009
Date of revision:
Principle of effective demand; D/Z-mode´; Aggregate demand; Aggregate supply;
Find related papers by JEL classification:
- B31 - Schools of Economic Thought and Methodology - - History of Economic Thought: Individuals - - - Individuals
- B22 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Macroeconomics
- B2 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-01-24 (All new papers)
- NEP-HPE-2009-01-24 (History & Philosophy of Economics)
- NEP-LAB-2009-01-24 (Labour Economics)
- NEP-PKE-2009-01-24 (Post Keynesian Economics)
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"Macroeconomics after Keynes: a reconsideration of the general theory,"
Open Access publications from University College London
http://discovery.ucl.ac.u, University College London.
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