Keynes's multiplier in a two-sectoral framework
This paper endeavours to reinterpret one of the most fundamental concepts of macroeconomics: the Keynesian investment multiplier. The multiplier is not interpreted as a dynamic process (or quantity reaction of output) nor as a logical relation (or ratio) between income and investment expenditure, but as an equilibrium condition that prescribes the proportionality between the two 'departments' of the economy (the consumption-goods and the investment-goods sector) necessary for 'completely successful reproduction'. The Marxian concept of reproduction schemes is combined with Keynes's 'fundamental psychological law' (which states that the marginal propensity to consume is positive and less than unity) to derive this result. This 'structural' view of the multiplier is then used to analyse questions relating to economic growth, capital accumulation and structural change.
Volume (Year): 16 (2004)
Issue (Month): 3 ()
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- Pasinetti,Luigi, 1993. "Structural Economic Dynamics," Cambridge Books, Cambridge University Press, number 9780521432825, June.
- Lianos, Theodore P., 1979. "Domar's growth model and Marx's reproduction scheme," Journal of Macroeconomics, Elsevier, vol. 1(4), pages 405-412.
- L. Randall Wray, 1999.
"Theories of Value and the Monetary Theory of Production,"
Economics Working Paper Archive
wp_261, Levy Economics Institute.
- L. Randall Wray, 1999. "Theories of Value and the Monetary Theory of Production," Macroeconomics 9902008, EconWPA.
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