Explaining the Aggregate Price Level with Keynes’s Principle of Effective Demand
The conventional wisdom about Keynes’s Principle of Effective Demand is that it states something about quantities. It is widely held that the Principle determines the levels of output and employment in a world not governed by Say’s Law. This paper argues that the Principle of Effective Demand goes beyond this to explain not only ‘real’ activity levels but also the aggregate price level. A variant of the Post Keynesian D/Z-model is brought together with Marxian reproduction schemes to derive this result.
|Date of creation:||Nov 2004|
|Date of revision:|
|Contact details of provider:|| Postal: Leonhardstrasse 21, CH-8092 Zürich|
Phone: +41 44 632 42 39
Fax: +41 44 632 12 18
Web page: http://www.kof.ethz.ch
More information through EDIRC
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.:
- Davidson, Paul, 1972. "Money and the Real World," Economic Journal, Royal Economic Society, vol. 82(325), pages 101-15, March.
- A. P. Thirl Wall & J. M. Keynes, 1999.
"A "Second Edition" of Keynes' General Theory,"
Journal of Post Keynesian Economics,
M.E. Sharpe, Inc., vol. 21(3), pages 367-386, April.
- Nell,Edward J., 1998. "The General Theory of Transformational Growth," Cambridge Books, Cambridge University Press, number 9780521590068, December.
- Giuseppe Fontana, 2004. "Hicks on monetary theory and history: money as endogenous money," Cambridge Journal of Economics, Oxford University Press, vol. 28(1), pages 73-88, January.
- Casarosa, Carlo, 1981. "The Microfoundations of Keynes's Aggregate Supply and Expected Demand Analysis," Economic Journal, Royal Economic Society, vol. 91(361), pages 188-94, March.
- John King, 1993.
"Aggregate Supply and Demand Analysis Since Keynes: A Partial History,"
1993.16, School of Economics, La Trobe University.
- John King, 1993. "Aggregate Supply and Demand Analysis Since Keynes: A Partial History," Working Papers 1993.16, School of Economics, La Trobe University.
- Paul Davidson, 1994. "Post Keynesian Macroeconomic Theory," Books, Edward Elgar Publishing, number 124, June.
- Asimakopulos,A., 1991. "Keynes's General Theory and Accumulation," Cambridge Books, Cambridge University Press, number 9780521368155, December.
- Skott,Peter, 2008.
"Conflict and Effective Demand in Economic Growth,"
Cambridge University Press, number 9780521066310, December.
- Victoria Chick, 1983. "Macroeconomics after Keynes: A Reconsideration of the General Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262530457, March.
- Jochen Hartwig, 2004. "Beyond the Market Paradigm: on Keynes's Principle of Effective Demand, and on the Irrelevance of Rigidities for His Explanation of Involuntary Unemployment," History of Economic Ideas, Fabrizio Serra Editore, Pisa - Roma, vol. 12(1), pages 67-94.
- Jochen Hartwig, 2004. "Keynes's multiplier in a two-sectoral framework," Review of Political Economy, Taylor & Francis Journals, vol. 16(3), pages 309-334.
- Hicks, J. R., 1987. "Methods of Dynamic Economics," OUP Catalogue, Oxford University Press, number 9780198772873, December.
- Palley, Thomas I, 1997. "Expected Aggregate Demand, the Production Period and the Keynesian Theory of Aggregate Supply," The Manchester School of Economic & Social Studies, University of Manchester, vol. 65(3), pages 295-309, June.
- Douglas Vickers, 1987. "Aggregate Supply and the Producers' Expected Demand Curve: Performance and Change in the Macroeconomy," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 10(1), pages 84-104, October.
- Dutt, Amitava Krishna, 1987. "Keynes with a Perfectly Competitive Goods Market," Australian Economic Papers, Wiley Blackwell, vol. 26(49), pages 275-93, December.
- E. Roy Weintraub, 1974. "Keynes' Employment Function," History of Political Economy, Duke University Press, vol. 6(2), pages 162-164, Summer.
- Claude Gnos, 2004. "Is ex-ante ex-post analysis irrelevant to Keynes's theory of employment?," Review of Political Economy, Taylor & Francis Journals, vol. 16(3), pages 335-345.
- Gilbert Koenig, 1980. "Les fondements microéconomiques du principe de la demande effective," Revue Économique, Programme National Persée, vol. 31(3), pages 430-464.
When requesting a correction, please mention this item's handle: RePEc:kof:wpskof:04-95. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If references are entirely missing, you can add them using this form.