The state of short-term expectation

Mark Hayes

No PKWP1107, Working Papers from Post Keynesian Economics Society (PKES)

Abstract: The claim that Keynes makes a tacit assumption in Chapter 3 of The General Theory, that short-term expectations are fulfilled, is unwarranted and unnecessary. The seminal paper by Kregel (1976) and its subsequent development by Chick, among others, which has contributed to the general acceptance of this claim, is critically evaluated in depth. The present paper clears the ground for a recognition that Keynes instead adopted the assumption of judicious foresight, which would now be called short-term rational expectations. This recognition in turn should encourage a reappraisal of Keynes’s thought, by mainstream economists and others.

Keywords: Keynes; effective demand; formation of expectations (search for similar items in EconPapers)
JEL-codes: B22 B31 E12 (search for similar items in EconPapers)
Pages: 30
Date: 2011-09
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https://postkeynesian.net/media/working-papers/PKWP1107.pdf First version, 2011 (application/pdf)

Related works:
Journal Article: The State of Short-term Expectation (2013)
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