"On Keynesian Economics and the Economics of Keynes" after fifty years

[en] Axel Leijonhufvud’s "On Keynesian Economics and the Economics of Keynes" (1968) definitely belongs to the category of 'classic' books. Its message — decentralised economies are prone to large increases in unemployment since communication failures prevent the optimal coordination of private decisions — is by now well understood. In this paper, we argue that even though most commentators correctly identify this message, they overlook two crucial aspects of Leijonhufvud’s demonstration. These aspects relate to what the author calls the 'aggregative structure' and the 'transaction structure' of macro-models. We show that the former type of structure plays a central role in the emergence of unemployment in the 'Economics of Keynes', while the latter type of structure explains why unemployment is 'involuntary'.

Disciplines :

General economics & history of economic thought

Author, co-author :

Clerc, Pierrick ; Université de Liège - ULiège > HEC Liège : UER > Macroéconomie et pensée économique

Dos Santos Ferreira, Rodolphe; Université de Strasbourg > BETA

Language :

English

Title :

"On Keynesian Economics and the Economics of Keynes" after fifty years

Publication date :

2020

Journal title :

European Journal of the History of Economic Thought

ISSN :

0967-2567

eISSN :

1469-5936

Publisher :

Routledge, London, United Kingdom

Peer reviewed :

Peer Reviewed verified by ORBi

Available on ORBi :

since 03 February 2021

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109 (11 by ULiège)

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554 (2 by ULiège)

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