KEYNES AND THE EFFECTIVE DEMAND PRINCIPLE: REFUTATION OF SAY´S LAW, DETERMINATION OF EXPECTATIONS AND NATURE OF BALANCE

Diego Gonçalves Favorato (), Arthur Osvaldo Colombo () and Sarah Gonçalves Patrocínio Sartório ()
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Diego Gonçalves Favorato: Universidade Federal do Espírito Santo (Ufes)
Arthur Osvaldo Colombo: Universidade Federal do Espírito Santo (Ufes)
Sarah Gonçalves Patrocínio Sartório: Universidade Estadual de Campinas (Unicamp)

Revista de Economia Mackenzie (REM), 2020, vol. 17, issue 2, 51-72

Abstract: The article below focuses on clarifying the questions coming up from the socalled Keynes Effective Demand Principle, presented in his General Theory. Therefore, it demonstrates how Keynes defined the concepts used in the elaboration of the so-called Effective Demand and illustrates its economic characteristics; how this principle refuted Say’s Law, that is, the prevailing macroeconomic mainstream and clearing the questions about the lack of (neoclassical) labor market and the possibility of involuntary unemployment. Besides, it is necessary to analyze the nature of short and long term expectations and their relationship to each other, then achieving the understanding of the equilibrium models proposed by Kregel from the Keynesian theory and its viability to comprehend the dynamics of the economic system.

Keywords: Effective demand; equilibrium; expectations; uncertainty; money (search for similar items in EconPapers)
JEL-codes: B41 (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:aft:journl:v:17:2:2020:jul:dec:p:51-72

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