Reconstructing Keynes’s IS-LM Approach, 1931 to 1937

Warren Young () and Edward W. Fuller ()
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Warren Young: Bar Ilan University

Chapter Chapter 5 in Reinterpreting Mr. Keynes, 2022, pp 79-116 from Springer

Abstract: Abstract After reviewing the development of Keynes’s IS-LMIS-LM model through December 1933, this chapter explores his IS-LM approach between 1934 and 1937. Keynes adopted a formal IS-LM approach in the 1934 drafts. The chapter addresses archival material that shows Keynes himself invented the marginal efficiency of capitalMarginal efficiency of capital. Keynes’s 1934 lectures are analyzed, and we show he started de-formalizing his presentation in late 1934. In mid-1935, he started re-formalizing the General Theory, and this re-formalizationRe-formalization of General Theory process led to the Harrod–Keynes diagramHarrod-Keyes Diagram. The chapter ends with an analysis of Keynes’s famous QJE articleQJE article and concludes that Keynes maintained his verbal IS-LMVerbal IS-LM approach through 1937.

Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:spr:spshcp:978-3-030-91342-7_5

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DOI: 10.1007/978-3-030-91342-7_5

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