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The State of Short-term Expectation

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  • M. G. Hayes

Abstract

The claim that Keynes makes a tacit assumption in Chapter 3 of The General Theory , that short-term expectations are fulfilled, is unwarranted and unnecessary. Kregel's seminal 1976 paper and its subsequent development by Chick and others have contributed to the general acceptance of this claim; these contributions are critically evaluated in the present paper. This critique clears the ground for a recognition that Keynes instead adopted the assumption of judicious foresight, which would now be called short-term rational expectations. That recognition in turn should encourage a reappraisal of Keynes's thought, by mainstream economists and others.

Suggested Citation

  • M. G. Hayes, 2013. "The State of Short-term Expectation," Review of Political Economy, Taylor & Francis Journals, vol. 25(2), pages 205-224, April.
  • Handle: RePEc:taf:revpoe:v:25:y:2013:i:2:p:205-224
    DOI: 10.1080/09538259.2012.729929
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    References listed on IDEAS

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    1. M. G. Hayes, 2006. "The Economics of Keynes," Books, Edward Elgar Publishing, number 12601.
    2. Mark Hayes, 2007. "The Point of Effective Demand," Review of Political Economy, Taylor & Francis Journals, vol. 19(1), pages 55-80.
    3. John King, 1993. "Aggregate Supply and Demand Analysis Since Keynes: A Partial History," Working Papers 1993.16, School of Economics, La Trobe University.
    4. Claudio Sardoni, 2008. "Some considerations on equilibrium and realism," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 30(3), pages 485-490, April.
    5. M. G. Hayes, 2013. "The State of Short-term Expectation," Review of Political Economy, Taylor & Francis Journals, vol. 25(2), pages 205-224, April.
    6. M. G. Hayes, 2008. "Keynes's degree of competition," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 15(2), pages 275-291.
    7. Tony Lawson, 2005. "The (confused) state of equilibrium analysis in modern economics: an explanation," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 27(3), pages 423-444.
    8. Vercelli,Allessandro, 1991. "Methodological Foundations of Macroeconomics," Cambridge Books, Cambridge University Press, number 9780521392945.
    9. 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.
    10. 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.
    11. 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 209-225, June.
    12. Edward J. Amadeo, 1989. "Keynes’s Principle of Effective Demand," Books, Edward Elgar Publishing, number 11.
    13. Gary Mongiovi, 2000. "Shackle on Equilibrium: A Critique," Review of Social Economy, Taylor & Francis Journals, vol. 58(1), pages 108-124.
    14. Roger Backhouse, 2004. "History and equilibrium: A partial defense of equilibrium economics," Journal of Economic Methodology, Taylor & Francis Journals, vol. 11(3), pages 291-305.
    15. Eleonora Sanfilippo, 2011. "The Short Period and the Long Period in Macroeconomics: An Awkward Distinction," Review of Political Economy, Taylor & Francis Journals, vol. 23(3), pages 371-388.
    16. Dany Lang & Mark Setterfield, 2007. "History versus equilibrium? on the possibility and realist basis of a general critique of traditional equilibrium analysis," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 29(2), pages 191-209, January.
    17. Mark Hayes, 2006. "The Economics of Keynes: A New Guide to The General Theory," Books, Post Keynesian Economics Society (PKES), number nggt.
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    1. M. G. Hayes, 2013. "The State of Short-term Expectation," Review of Political Economy, Taylor & Francis Journals, vol. 25(2), pages 205-224, April.

    More about this item

    JEL classification:

    • B22 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Macroeconomics
    • B31 - Schools of Economic Thought and Methodology - - History of Economic Thought: Individuals - - - Individuals
    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian

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