Keynes's Treatise: aggregate price theory for modern analysis?

Gillman, Max 2002. Keynes's Treatise: aggregate price theory for modern analysis? The European Journal of the History of Economic Thought 9 (3) , pp. 430-451. 10.1080/09672560210149242

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Abstract

The paper explores the theory of the aggregate price, profit, and business fluctuations in Keyne's Treatise for its implications for modern macro-economic analysis. As in the Treatise, profits are first defined within a theory of the agregate price level, as aggregate investment minus saving. Deriving aggregate total revenue and aggregate total cost from this price theory, the paper shows how to construct a version of the Keynesian cross diagram. The cross construction suggests an important qualification for fiscal policy, that total cost does not shift. Then, using a neoclassical definition of profit and the total-cost / total-revenue approach, the paper derives aggregate supply, and then adds aggregate demand in an integrated framework. Comparative statics of the AS-AD analysis and the central role of profit in the Treatise suggest that a focus on profit might be useful in identifying exogenous technology shocks of real business cycle theory.

Item Type:	Article
Date Type:	Publication
Status:	Published
Schools:	Business (Including Economics)
Subjects:	H Social Sciences > H Social Sciences (General) H Social Sciences > HB Economic Theory H Social Sciences > HG Finance
Uncontrolled Keywords:	Price; Revenue; Cost; Cross; Profit; As-AD; Cycles
Publisher:	Taylor & Francis
ISSN:	0967-2567
Last Modified:	19 Mar 2016 23:09
URI:	https://orca.cardiff.ac.uk/id/eprint/41089

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