Explaining the Aggregate Price Level with Keynes’s Principle of Effective Demand
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Date
2004-11
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Working Paper
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yes
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Abstract
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.
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published
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Volume
95
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KOF Swiss Economic Institute, ETH Zurich
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Subject
KEYNESIANISM (ECONOMIC THEORIES); Post Keynesianism; Reproduction schemes; DEMAND (ECONOMIC THEORY); MODELLRECHNUNG UND SIMULATION IN BETRIEBSWIRTSCHAFT; NACHFRAGE (WIRTSCHAFTSTHEORIE); Effective demand; D/Z-model; KEYNESIANISMUS (WIRTSCHAFTSTHEORIEN); Multiplier; MATHEMATICAL MODELING AND SIMULATION IN BUSINESS ECONOMICS
Organisational unit
02525 - KOF Konjunkturforschungsstelle / KOF Swiss Economic Institute
Notes
See also: http://e-citations.ethbib.ethz.ch/view/pub:188492.