Explaining the Aggregate Price Level with Keynes's Principle of Effective Demand

Jochen Hartwig

No 04-95, KOF Working papers from KOF Swiss Economic Institute, ETH Zurich

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.

Keywords: Effective demand; Multiplier; Post Keynesianism; D/Z-model; Reproduction schemes (search for similar items in EconPapers)
Pages: 22 pages
Date: 2004-11
New Economics Papers: this item is included in nep-mac and nep-pke
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://dx.doi.org/10.3929/ethz-a-004871456 (application/pdf)

Related works:
Journal Article: Explaining the aggregate price level with Keynes's principle of effective demand (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:kof:wpskof:04-95

Access Statistics for this paper

More papers in KOF Working papers from KOF Swiss Economic Institute, ETH Zurich Contact information at EDIRC.
Bibliographic data for series maintained by ().