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A look at the background to Keynes' validation of the IS-LM model
[Un retour sur les dessous de la validation par Keynes du modèle IS-LM]

Author

Listed:
  • Nicolas Piluso

    (CERTOP - Centre d'Etude et de Recherche Travail Organisation Pouvoir - UT2J - Université Toulouse - Jean Jaurès - UT - Université de Toulouse - UT3 - Université Toulouse III - Paul Sabatier - UT - Université de Toulouse - CNRS - Centre National de la Recherche Scientifique, IUT Paul Sabatier - Institut Universitaire de Technologie - Paul Sabatier - UT3 - Université Toulouse III - Paul Sabatier - UT - Université de Toulouse)

Abstract

The purpose of this article is to revisit the Hicks-Keynes controversy over the ISLM model. We propose an alternative and complementary explanation to Keynes's claim that he validates Hicks's work, even though post-Keynesians as a whole have rejected it. The usual analysis of this controversy concerns the theory of the interest rate. We show that if Keynes accepts the ISLM model, it is because it is consistent with the core of the General Theory, which bases involuntary unemployment on the rejection of the "second classical postulate" and the principle of effective demand. The latter make employment a variable determined outside the labor market like Hicks' ISLM model.

Suggested Citation

  • Nicolas Piluso, 2024. "A look at the background to Keynes' validation of the IS-LM model [Un retour sur les dessous de la validation par Keynes du modèle IS-LM]," Post-Print hal-03826062, HAL.
    • Handle: RePEc:hal:journl:hal-03826062
    DOI: 10.48611/isbn.978-2-406-17116-4.p.0159
    as

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