 Uncertainty and Rationality: Keynes and Modern EconomicsJan Kregel and Eric Nasica Chapter 11 in Fundamental Uncertainty, 2011, pp 272-293 from Palgrave Macmillan Abstract: Abstract The intellectual revolution triggered by Keynes’s General Theory of Employment, Interest and Money (1973c [1936]; hereafter GT) is often described as a shift in emphasis from microeconomics to macroeconomics, and as a shift from study of optimal behaviour of the individual consumer or the individual firm to study of broad statistical aggregates, such as income and employment, or consumption and investment. For a long time macroeconomists thought it unnecessary to provide a special explanation of individual behaviour, but eventually traditional microeconomics was introduced into the Keynesian model to provide ‘micro foundations’ to explain individual decision making. However, Keynes never used the term ‘macroeconomics’, and it soon became obvious that there was an inherent tension between the traditional approach to optimal individual behaviour and the Keynesian explanation of the movements of income and employment. Keywords: Subjective Probability; Rational Expectation; Traditional Theory; Rational Belief; Neoclassical Theory (search for similar items in EconPapers) There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-0-230-30568-7_11 Ordering information: This item can be ordered from Access Statistics for this chapter More chapters in Palgrave Macmillan Books from Palgrave Macmillan |
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