Keynesian Economics and General Equilibrium Theory: Reflections on Some Current Debates

Frank Hahn

Chapter 1 in The Microeconomic Foundations of Macroeconomics, 1977, pp 25-40 from Palgrave Macmillan

Abstract: Abstract To many economists Keynesian economics deals with important relevant problems and General Equilibrium theory deals with no relevant problems at all. This view is often the consequence of the ease of learning Keynesian macro-arithmetic compared with reading Debreu. But it also has, alas, an element of truth. This is quite simply that General Equilibrium theorists have been unable to deliver one half at least of the required story: how does General Equilibrium come to be established? Closely related to this lacuna is the question of what signals are perceived and transmitted in a decentralised economy and how? The importance of Keynesian economics to the General Equilibrium theorist is twofold. It seems to be addressed to just these kinds of questions and it is plainly in need of proper theoretical foundations.

Keywords: General Equilibrium; Excess Demand; Equilibrium Theory; Walrasian Equilibrium; Perfect Competition (search for similar items in EconPapers)
Date: 1977
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DOI: 10.1007/978-1-349-03236-5_2

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