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From The Keynesian Revolution to the Klein-Goldberger model: Klein and the dynamization of Keynesian theory

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  • Michel De Vroey

    () (Louvain University - IRES)

  • Pierre Malgrange

    (Paris - CEPREMAP)

Abstract

According to Klein, Keynes’s General Theorywas crying out for empirical application. He set himself the task of implementing this extension. Our paper documents the different stages of his endeavor, focusing on his The Keynesian Revolution book, his Journal of Political Economy article on aggregate demand theory, and his essay on the empirical foundations of Keynesian theory published in the Post-Keynesian Economics book edited by Kurihara. Klein’s claim is that his empirical model (the Klein-Goldberger model) vindicates Keynes’s theoretical insights, in particular the existence of involuntary unemployment. While praising Klein for having succeeded in making Keynesian theory empirical and dynamic, we argue that he paid a high price for this achievement. Klein and Goldberger’s model is less Keynesian than they claim. In particular, Klein’s claim that it validates the existence of involuntary unemployment does not stand up to close scrutiny.

Suggested Citation

  • Michel De Vroey & Pierre Malgrange, 2012. "From The Keynesian Revolution to the Klein-Goldberger model: Klein and the dynamization of Keynesian theory," History of Economic Ideas, Fabrizio Serra Editore, Pisa - Roma, vol. 20(2), pages 113-136.
  • Handle: RePEc:hid:journl:v:20:y:2012:2:5:p:113-136
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    1. Michel, DE VROEY, 2005. "Involuntary Unemployment : the Elusive Quest for a Theory," Discussion Papers (ECON - Département des Sciences Economiques) 2005004, Université catholique de Louvain, Département des Sciences Economiques.
    2. Michael De Vroey, 2000. "IS-LM à la Hicks versus IS-LM à la Modigliani," History of Political Economy, Duke University Press, vol. 32(2), pages 293-316, Summer.
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    2. Erich Pinzón Fuchs, 2014. "Econometrics as a Pluralistic Scientific Tool for Economic Planning: On Lawrence R. Klein's Econometrics," Post-Print halshs-01130762, HAL.
    3. Michel De Vroey, 2012. "Microfoundations: A Decisive Dividing Line between Keynesian and New Classical Macroeconomics?," Chapters, in: Microfoundations Reconsidered, chapter 5, Edward Elgar Publishing.
    4. Gossé, Jean-Baptiste & Guillaumin, Cyriac, 2013. "L’apport de la représentation VAR de Christopher A. Sims à la science économique," L'Actualité Economique, Société Canadienne de Science Economique, vol. 89(4), pages 309-319, Décembre.
    5. Hall, Stephen George & Roudoi, Andrei & Albu, Lucian Liviu & Lupu, Radu & Calin, Adrian Cantemir, 2014. "Lawrence R. Klein and the Economic Forecasting – A Survey," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(1), pages 5-14, March.

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