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The State of Short-Term Expectation

  • Mark Hayes

    ()

    (University of Cambridge)

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. The seminal paper by Kregel (1976) and its subsequent development by Chick, among others, which has contributed to the general acceptance of this claim, is critically evaluated in depth. The present paper clears the ground for a recognition that Keynes instead adopted the assumption of judicious foresight, which would now be called short-term rational expectations. This recognition in turn should encourage a reappraisal of Keynes’s thought, by mainstream economists and others.

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File URL: http://www.postkeynesian.net/downloads/wpaper/PKWP1107.pdf
File Function: First version, 2011
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Paper provided by Post Keynesian Economics Study Group (PKSG) in its series Working Papers with number PKWP1107.

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Length: 31 pages
Date of creation: Sep 2011
Date of revision:
Handle: RePEc:pke:wpaper:pkwp1107
Contact details of provider: Web page: http://www.postkeynesian.net

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  1. Mark Hayes, 2006. "The Economics of Keynes: A New Guide to The General Theory," Books, Post Keynesian Economics Study Group (PKSG), number nggt.
  2. Mark Hayes, 2007. "The Point of Effective Demand," Review of Political Economy, Taylor & Francis Journals, vol. 19(1), pages 55-80.
  3. M. G. Hayes, 2013. "The State of Short-term Expectation," Review of Political Economy, Taylor & Francis Journals, vol. 25(2), pages 205-224, April.
  4. 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.
  5. repec:ltr:wpaper:1993.16 is not listed on IDEAS
  6. 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.
  7. 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.
  8. John King, 1993. "Aggregate Supply and Demand Analysis Since Keynes: A Partial History," Working Papers 1993.16, School of Economics, La Trobe University.
  9. Tony Lawson, 2005. "The (confused) state of equilibrium analysis in modern economics: an explanation," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 27(3), pages 423-444, April.
  10. Olivier Allain, 2006. "Effective demand and short-term adjustments in the General Theory," Cahiers de la Maison des Sciences Economiques bla06018, Université Panthéon-Sorbonne (Paris 1).
  11. 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.
  12. M. G. Hayes, 2006. "The Economics of Keynes," Books, Edward Elgar, number 12601.
  13. 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 209-25, June.
  14. Gary Mongiovi, 2000. "Shackle on Equilibrium: A Critique," Review of Social Economy, Taylor & Francis Journals, vol. 58(1), pages 108-124.
  15. 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.
  16. 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.
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