 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 Richard Sturn, Hans Michael Trautwein, Muriel Dal-Pont-Legrand and Maxime Desmarais-Tremblay More articles in The European Journal of the History of Economic Thought from Taylor & Francis Journals |
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