Fluctuations in the Inducement to Invest

Brendan Sheehan
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Brendan Sheehan: Leeds Metropolitan University

Chapter 8 in Understanding Keynes’ General Theory, 2009, pp 159-171 from Palgrave Macmillan

Abstract: Abstract Keynes uses short-period changes in the state of long-term expectation working through the marginal efficiency of capital and the money rate of interest to explain fluctuations in the inducement to invest. This chapter completes the explanation of why the inducement to invest is inherently unstable in character in a capitalist economy. The chapter also highlights the impact that changes in the level of fixed investment spending have on effective demand and employment.

Keywords: Total Employment; Capital Asset; Labour Unit; Effective Demand; Marginal Propensity (search for similar items in EconPapers)
Date: 2009
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-0-230-23285-3_8

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DOI: 10.1057/9780230232853_8

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