On the Mythology of the Keynesian Multiplier: Unmasking the Myth and the Inadequacies of Some Earlier Criticisms

James C. W. Ahiakpor

American Journal of Economics and Sociology, 2001, vol. 60, issue 4, 745-773

Abstract: Keynes’s multiplier story invites acceptance by building on the fact that people typically consume only a fraction of their income and that such purchases are incomes for sellers. By misrepresenting the classical definition of saving and the meaning of Say’s Law, Keynes laid the grounds for extolling the virtues of consumption spending as determining income and employment growth. But the mythology of the multiplier story becomes clear when we ask, “From where do people find the means to purchase consumption goods, other than production?” The inadequacies of several earlier criticisms stem from their failure to focus on this fundamental point.

Date: 2001
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