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Kalecki's 1934 model VS. the IS-LM model of Hicks (1937) and Modigliani (1944)

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  • Michaël Assous

Abstract

This article is based on Kalecki's * 1934 study entitled 'Three Systems'. It aims to show that before the General Theory Kalecki developed a mathematical model capable of expressing both the main conclusions of the neoclassical theory - Kalecki's Systems I and II - and the persistence of unemployment - Kalecki's System III. The present analysis stresses the relevance and the originality of Kalecki's 1934 model by comparing it to the two main variants of the IS-LM model - Hicks (1937) and Modigliani (1944) - around which the neoclassical synthesis was built. It shows that although there does indeed exist a formal proximity between Kalecki's model and those of Hicks and Modigliani, Kalecki can be considered the first to offer an original explanation of the difference between classical and Keynesian models that depends neither on liquidity preference as proposed by Hicks nor on the rigidity of money wages as proposed by Modigliani.

Suggested Citation

  • Michaël Assous, 2007. "Kalecki's 1934 model VS. the IS-LM model of Hicks (1937) and Modigliani (1944)," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 14(1), pages 97-118.
    • Handle: RePEc:taf:eujhet:v:14:y:2007:i:1:p:97-118
    DOI: 10.1080/09672560601168488
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    References listed on IDEAS

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    1. Vasilev, Aleksandar & Maksumov, Rashid, 2010. "Critical analysis of Chapter 23 of Keynes’s Notes on Mercantilism in The General Theory of Employment, Interest and Money (1936)," EconStor Research Reports 155318, ZBW - Leibniz Information Centre for Economics.
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