Unemployment and financial markets domination in Keynes' General Theory

Chômage et domination des marchés financiers dans la Théorie Générale de Keynes

Nicolas Piluso () and Edouard Cottin-Euziol ()
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Edouard Cottin-Euziol: LC2S - Laboratoire caribéen de sciences sociales - CNRS - Centre National de la Recherche Scientifique - UA - Université des Antilles, UA - Université des Antilles

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Abstract: What is the usefulness of chapters 12, 13 and 15 on long-run forecasting, the stock market and on interest rate theory in Keynes' General Theory of Employment? The traditional interpretation is that the financial market, which is intrinsically unstable, feeds uncertainty and can modulate the level of effective demand downwards. We show that by establishing a close connection between stock prices and the marginal efficiency of capital, chapter 12 appears essential to demonstrate that Keynesian involuntary unemployment is in no way linked to wage rigidity. More broadly, Keynes laid the foundations for an analysis of the financial market's sanction of economic policies, later developed by the School of Conventions.

Keywords: Chômage; convention; efficacité marginale du capital; salaires; politique économique; Convention; Efficacité marginale du capital; Politique économique; Salaire; Unemployment; Conventions; Marginal efficiency of capital; Economic policy; Wages (search for similar items in EconPapers)
Date: 2023
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Published in Economie appliquée, 2023, 2 (6), pp.69-92. ⟨10.48611/isbn.978-2-406-18063-0.p.0069⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-04362241

DOI: 10.48611/isbn.978-2-406-18063-0.p.0069

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