Keynes’s employment function and the gratuitous Phillips curve disaster
AbstractKeynes had a lot of plausible things to say about unemployment and its causes. His ‘mercurial mind’, though, relied on intuition which means that he could not prove his diverse opinions convincingly. This explains why Keynes’s ideas immediately invited bastardizations. One of them, the Phillips curve synthesis, proved to be fatal. This paper identifies Keynes’s undifferentiated employment function as weak spot. The structural employment function, on the other hand, works in inflationary and deflationary environments and supersedes the bastard Phillips curve. It will be rigorously demonstrated why there is no trade-off between price inflation and unemployment.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 43111.
Date of creation: 06 Dec 2012
Date of revision:
new framework of concepts; structure-centric; axiom set; Say’s regime; Keynes’s regime; market clearing; full employment; product price flexibility; intertemporal budget balancing; multiplier; trade-off; price inflation; wage inflation;
Other versions of this item:
- Egmont Kakarot-Handtke, 2013. "Keynes's Employment Function and the Gratuitous Phillips Curve Disaster," Economics Working Paper Archive wp_773, Levy Economics Institute, The.
- E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian
- E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-12-15 (All new papers)
- NEP-LAB-2012-12-15 (Labour Economics)
- NEP-MAC-2012-12-15 (Macroeconomics)
- NEP-PKE-2012-12-15 (Post Keynesian Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Frank Ackerman, 2001. "Still dead after all these years: interpreting the failure of general equilibrium theory," Journal of Economic Methodology, Taylor & Francis Journals, vol. 9(2), pages 119-139.
- Kakarot-Handtke, Egmont, 2012. "The rhetoric of failure: a hyper-dialog about method in economics and how to get things going," MPRA Paper 43276, University Library of Munich, Germany.
- Olivier Blanchard & Lawrence F. Katz, 1996.
"What We Know and Do Not Know About the Natural Rate of Unemployment,"
NBER Working Papers
5822, National Bureau of Economic Research, Inc.
- Olivier Blanchard & Lawrence F. Katz, 1997. "What We Know and Do Not Know about the Natural Rate of Unemployment," Journal of Economic Perspectives, American Economic Association, vol. 11(1), pages 51-72, Winter.
- Blanchard, O & Katz, L, 1996. "What We Know and Do Not Know about the Natural Rate of Unemployment," Working papers 96-29, Massachusetts Institute of Technology (MIT), Department of Economics.
- Steve Keen, 2011. "Debunking Macroeconomics," Economic Analysis and Policy (EAP), Queensland University of Technology (QUT), School of Economics and Finance, vol. 41(3), pages 147-168, December.
- Kakarot-Handtke, Egmont, 2011.
"Keynes’s missing axioms,"
32742, University Library of Munich, Germany, revised 11 Aug 2011.
- Frank Hahn & Robert Solow, 1997. "A Critical Essay on Modern Macroeconomic Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 026258154x, January.
- Robert E. Hall, 2011.
"The Long Slump,"
NBER Working Papers
16741, National Bureau of Economic Research, Inc.
- Gordon, Robert J, 1990. "What Is New-Keynesian Economics?," Journal of Economic Literature, American Economic Association, vol. 28(3), pages 1115-71, September.
- Forder, James, 2010. "Friedman’S Nobel Lecture And The Phillips Curve Myth," Journal of the History of Economic Thought, Cambridge University Press, vol. 32(03), pages 329-348, September.
- Marek Hudik, 2011. "Why economics is not a science of behaviour," Journal of Economic Methodology, Taylor & Francis Journals, vol. 18(2), pages 147-162.
- Kakarot-Handtke, Egmont, 2013. "Settling the theory of saving," MPRA Paper 44479, University Library of Munich, Germany.
- Kakarot-Handtke, Egmont, 2012. "Taxes, profits, and employment: a structural axiomatic analysis," MPRA Paper 43581, University Library of Munich, Germany.
- Kakarot-Handtke, Egmont, 2013. "Toolism! A Critique of Econophysics," MPRA Paper 46630, University Library of Munich, Germany.
- Kakarot-Handtke, Egmont, 2013. "Understanding Profit and the Markets: The Canonical Model," MPRA Paper 48691, University Library of Munich, Germany.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ekkehart Schlicht).
If references are entirely missing, you can add them using this form.