Keynesian macroeconomics as the rejection of classical axioms

Steven Fazzari

Journal of Post Keynesian Economics, 2009, vol. 32, issue 1, 3-18

Abstract: This paper explores themes suggested by Paul Davidson's 2007 book >i>John Maynard Keynes.>/i> I argue, first, that rejection of the neutrality of money goes beyond nominal rigidity to explain the possibility of insufficient effective demand. Second, I relate Davidson's rejection of the "gross substitution axiom" to the Keynesian critique of the coordination of saving and investment through the loanable funds market, and to the possible failure of wage and price adjustment to assure full employment aggregate demand. Third, I propose that the inherent uncertainty implied by Davidson's assumption of a nonergodic system affects the way economists understand human behavior.

Keywords: Paul Davidson; General Theory; John Maynard Keynes; uncertainty (search for similar items in EconPapers)
Date: 2009
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