THE KEYNESIAN MODEL FRAMEWORK AND THE CHOICE OF THE UNIT OF MEASURE
Alain Beraud ()
No 2013-11, THEMA Working Papers from THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise
This contribution analyzes how Keynes and the keynesians asked the question of the choice of the unit of measure of the macroeconomic aggregates. Underlining the narrow relationships which exist between the lectures which Keynes professed between 1933 and 1935 and the diverse versions of the model IS-LM, it shows that the problems arise from the way Keynes had approached this problem. To argue about the monetary value of the aggregates leads to dichotomiser the model and does not allow to analyze correctly the interdependence between the labor market on one hand and the goods markets and the money market on the other hand. The model so formulated does not allow to treat in a rigorous way the effects of a variation of the monetary wage. It lets think, wrongly, that there is inevitably a full employment equilibrium.
Keywords: Keynes; IS-LM; units of measure. (search for similar items in EconPapers)
JEL-codes: B22 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-his, nep-hpe, nep-mon and nep-pke
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