Between Pigou and Keynes: Champernowne on Employment and Expectations

Mauro Boianovsky

A chapter in Expectations, 2020, pp 69-85 from Springer

Abstract: Abstract The paper investigates Champernowne’s 1936 attempt to sort out the debate between Pigou (The theory of unemployment. Macmillan, London, 1933) and Keynes (The general theory of employment, interest and money. Macmillan, London, 1936) about employment determination. Champernowne agreed with Keynes that workers can only bargain for a money-wage, but argued that, to the extent that workers’ (adaptive) price expectations lead to accelerating inflation or deflation, this will prompt central banks to change interest rates in order to bring the economy to its equilibrium (“basic”) unemployment rate, with real wages equal to their anticipated values. However, that mechanism will not work if general uncertainty (“nervousness”) prevails among businessmen. Whereas economists before him tended to focus on the role of expectations in assets markets only, Champernowne discussed expectations in both assets and labour markets.

Keywords: Champernowne; Pigou; Keynes; Employment; Expectations (search for similar items in EconPapers)
JEL-codes: B22 B30 (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:spr:spshcp:978-3-030-41357-6_4

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DOI: 10.1007/978-3-030-41357-6_4

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