The General Theory in an Open Economy

Louise Davidson

Chapter 7 in Uncertainty, International Money, Employment and Theory, 1999, pp 103-118 from Palgrave Macmillan

Abstract: Abstract Keynes’s (1936) General Theory of Employment Interest and Money1 is developed primarily in a closed economy context. Keynes did, however, introduce an open economy analysis when he noted that: (a) trade could modify the magnitude of the domestic employment multiplier (p. 120); (b) reductions in money wages would worsen the terms of trade and therefore reduce real income, while it could improve the balance of trade (p. 263); and (c) stimulating either domestic investment or foreign investment can increase domestic employment growth (p. 335)

Keywords: Exchange Rate; Real Wage; Trading Partner; Full Employment; Exchange Rate Regime (search for similar items in EconPapers)
Date: 1999
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DOI: 10.1007/978-1-349-14991-9_7

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