Effective demand and short-term adjustments in the General Theory

La demande effective et les ajustements de court terme dans la théorie générale

Olivier Allain ()

Post-Print from HAL

Abstract: Keynes' principle of effective demand constitutes a pillar for Post Keynesians theories. But Keynes' presentation remains difficult to interpret, mainly because the aggregate demand function is based on entrepreneurs' expectations. The problem is then to demonstrate how these entrepreneurs (whose only concern is making profits) are led to produce the effective demand (which partially results from the consumers' and investors' behaviour). Previous studies by authors like Weintraub or Davidson highlight the trial and error procedure here at stake. However, since their analyses are not built on a precise accounting of monetary flows, they fail to formally demonstrate the coherence of the whole adjustment process. The aim of this article is to provide such a formal demonstration. We thus concentrate on the General Theory to verify how it constitutes a coherent framework to analyse temporary equilibriums (at the end of every elementary period) and short-term dynamics which bring the economy towards the stationary equilibrium.

Keywords: Keynesian economics; General Theory; macroeconomics; effective demand; short-term expectations; Economie keynésienne; Théorie Générale; macroéconomie; demande effective; anticipations de court terme (search for similar items in EconPapers)
Date: 2006-02
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00112440
References: View references in EconPapers View complete reference list from CitEc
Citations:

Published in 2006

Downloads: (external link)
https://shs.hal.science/halshs-00112440/document (application/pdf)

Related works:
Working Paper: Effective demand and short-term adjustments in the General Theory (2009)
Working Paper: Effective demand and short-term adjustments in the General Theory (2006)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-00112440

Access Statistics for this paper

More papers in Post-Print from HAL
Bibliographic data for series maintained by CCSD ().