Globalization

Paul Davidson

Chapter 3 in Interpreting Keynes for the 21st Century, 2007, pp 37-54 from Palgrave Macmillan

Abstract: Abstract Keynes’s General Theory of Employment Interest and Money (1936) is developed primarily in a closed economy context. Keynes did, however, introduce an open economy analysis when he noted that 1. trade could modify the magnitude of the domestic employment multiplier (Keynes, 1936, p. 120), 2. reductions in money wages would worsen the terms of trade and therefore reduce real income, while it could improve the balance of trade (p. 263), and 3. stimulating either domestic investment or foreign investment can increase domestic employment growth (p. 335).

Keywords: Exchange Rate; Trading Partner; Flexible Exchange Rate; Exchange Rate System; Bretton Wood System (search for similar items in EconPapers)
Date: 2007
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DOI: 10.1057/9780230286559_3

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