TY - JOUR
T1 - Mr Keynes, the classics and the new Keynesians
T2 - a suggested formalisation
AU - Ferreira, Rodolphe dos Santos
PY - 2014/9/3
Y1 - 2014/9/3
N2 - The paper suggests a new Keynesian model of the General Theory. A reduced form entails a diagram with three curves relating employment and the real wage, which represent the two fundamental classical postulates and the principle of effective demand. This diagram illustrates better than IS–LM the generality of Keynes's theory, clarifying the distinction between voluntary and involuntary unemployment. Other significant features are the role of the distribution of expected interest rates among heterogeneous agents, whether dispersed or concentrated, in shaping the LM curve, as well as the role of wage competitiveness constraints as a foundation of Keynes's relative wage hypothesis.
AB - The paper suggests a new Keynesian model of the General Theory. A reduced form entails a diagram with three curves relating employment and the real wage, which represent the two fundamental classical postulates and the principle of effective demand. This diagram illustrates better than IS–LM the generality of Keynes's theory, clarifying the distinction between voluntary and involuntary unemployment. Other significant features are the role of the distribution of expected interest rates among heterogeneous agents, whether dispersed or concentrated, in shaping the LM curve, as well as the role of wage competitiveness constraints as a foundation of Keynes's relative wage hypothesis.
KW - Coordination failures
KW - Involuntary unemployment
KW - Keynes's model
KW - Liquidity trap
KW - Relative wages
UR - http://www.scopus.com/inward/record.url?scp=84911367191&partnerID=8YFLogxK
U2 - 10.1080/09672567.2014.881896
DO - 10.1080/09672567.2014.881896
M3 - Article
AN - SCOPUS:84911367191
SN - 0967-2567
VL - 21
SP - 801
EP - 838
JO - European Journal of the History of Economic Thought
JF - European Journal of the History of Economic Thought
IS - 5
ER -