Keynesian Unemployment as Non-Walrasian Equilibria

Dieter Sondermann

Chapter 7 in Issues in Contemporary Macroeconomics and Distribution, 1985, pp 197-215 from Palgrave Macmillan

Abstract: Abstract One of the fundamental insights that we owe to the work of Clower (1965) and Leijonhufvud (1968) is that the basic difference between the economics of the classics and the economics of Keynes lies in the assumptions made about the adjustment behaviour of the two systems: ‘in the short run, the “Classical” system adjusts to changes in money expenditures by means of price-level movements; the Keynesian adjusts primarily by way of real income movements’ (Leijonhufvud, 1968, p. 51). ‘In the Keynesian macrosystem the Marshallian ranking of price- and quantity adjustments speeds is reversed … The “revolutionary” element of the General Theory can perhaps not be stated in simpler terms’ (Leijonhufvud, 1968, p. 52).

Keywords: Wage Rate; Adjustment Process; Dividend Payment; Slow Manifold; Adjustment Speed (search for similar items in EconPapers)
Date: 1985
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DOI: 10.1007/978-1-349-06879-1_7

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