 Keynes's Treatise: aggregate price theory for modern analysis?The European Journal of the History of Economic Thought, 2002, vol. 9, issue 3, 430-451 Abstract: The paper explores the theory of the aggregate price, profit, and business fluctuations in Keyne's Treatise for its implications for modern macro-economic analysis. As in the Treatise, profits are first defined within a theory of the agregate price level, as aggregate investment minus saving. Deriving aggregate total revenue and aggregate total cost from this price theory, the paper shows how to construct a version of the Keynesian cross diagram. The cross construction suggests an important qualification for fiscal policy, that total cost does not shift. Then, using a neoclassical definition of profit and the total-cost / total-revenue approach, the paper derives aggregate supply, and then adds aggregate demand in an integrated framework. Comparative statics of the AS-AD analysis and the central role of profit in the Treatise suggest that a focus on profit might be useful in identifying exogenous technology shocks of real business cycle theory. Keywords: Price; Revenue; Cost; Cross; Profit; As-AD; Cycles (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:taf:eujhet:v:9:y:2002:i:3:p:430-451 Ordering information: This journal article can be ordered from DOI: 10.1080/09672560210149242 Access Statistics for this article The European Journal of the History of Economic Thought is currently edited by José Luís Cardoso More articles in The European Journal of the History of Economic Thought from Taylor & Francis Journals |
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