The State of Short-term Expectation

Mark Hayes

Review of Political Economy, 2013, vol. 25, issue 2, 205-224

Abstract: The claim that Keynes makes a tacit assumption in Chapter 3 of The General Theory , that short-term expectations are fulfilled, is unwarranted and unnecessary. Kregel's seminal 1976 paper and its subsequent development by Chick and others have contributed to the general acceptance of this claim; these contributions are critically evaluated in the present paper. This critique clears the ground for a recognition that Keynes instead adopted the assumption of judicious foresight, which would now be called short-term rational expectations. That recognition in turn should encourage a reappraisal of Keynes's thought, by mainstream economists and others.

Date: 2013
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Working Paper: The state of short-term expectation (2011)
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DOI: 10.1080/09538259.2012.729929

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