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D and Z in ROPE

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  • Jochen Hartwig

Abstract

The Review of Political Economy (ROPE) welcomed the year 2009 with an issue in which the first two articles use an interesting yet not very popular modeling framework, namely the aggregate demand/aggregate supply (D/Z) model from Chapter 3 of Keynes's General Theory. Unfortunately, as I intend to show in this paper, the interpretations of Keynes's D/Zmodel proposed by these two articles contradict each other. To resolve this unsatisfactory state of affairs, I will offer an evaluation of which of the two interpretations is more in line with Keynes's own suggestions.

Suggested Citation

  • Jochen Hartwig, 2009. "D and Z in ROPE," KOF Working papers 09-243, KOF Swiss Economic Institute, ETH Zurich.
    • Handle: RePEc:kof:wpskof:09-243
    DOI: 10.3929/ethz-a-005995954
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    References listed on IDEAS

    as
    1. MG Hayes, 2007. "Keynes's Z function, heterogeneous output and marginal productivity," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 31(5), pages 741-753, September.
    2. M. G. Hayes, 2008. "Keynes's Z function: a reply to Hartwig and Brady," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 32(5), pages 811-814, September.
    3. Jochen Hartwig, 2004. "Beyond the Market Paradigm: on Keynes's Principle of Effective Demand, and on the Irrelevance of Rigidities for His Explanation of Involuntary Unemployment," History of Economic Ideas, Fabrizio Serra Editore, Pisa - Roma, vol. 12(1), pages 67-94.
    4. Olivier Allain, 2009. "Effective Demand and Short-term Adjustments in the General Theory," Review of Political Economy, Taylor & Francis Journals, vol. 21(1), pages 1-22.
    5. John King, 1993. "Aggregate Supply and Demand Analysis Since Keynes: A Partial History," Working Papers 1993.16, School of Economics, La Trobe University.
    6. Sergio Parrinello, 1980. "The Price Level Implicit in Keynes' Effective Demand," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 3(1), pages 63-78, October.
    7. J. E. King, 1994. "Aggregate Supply and Demand Analysis Since Keynes: A Partial History," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 17(1), pages 3-31, September.
    8. Claude Gnos & Louis-Philippe Rochon, 2008. "The Keynesian Multiplier," Post-Print halshs-00314304, HAL.
    9. J. Hartwig & M. E. Brady, 2008. "Comment: Hayes on Z," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 32(5), pages 815-819, September.
    10. Palley, Thomas I, 1997. "Expected Aggregate Demand, the Production Period and the Keynesian Theory of Aggregate Supply," The Manchester School of Economic & Social Studies, University of Manchester, vol. 65(3), pages 295-309, June.
    11. Alfonso Palacio-Vera, 2009. "Capital Accumulation, Technical Progress and Labour Supply Growth: Keynes's Approach to Aggregate Supply and Demand Analysis Revisited," Review of Political Economy, Taylor & Francis Journals, vol. 21(1), pages 23-49.
    12. Jochen Hartwig, 2006. "Explaining the aggregate price level with Keynes's principle of effective demand," Review of Social Economy, Taylor & Francis Journals, vol. 64(4), pages 469-492.
    13. Jochen Hartwig, 2007. "Keynes vs. the Post Keynesians on the Principle of Effective Demand," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 14(4), pages 725-739.
    14. Paul Wells, 1987. "Keynes’s Employment Function and the Marginal Productivity of Labor," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 9(4), pages 507-515, July.
    15. David L. Roberts, 1978. "Patinkin, Keynes, and aggregate supply and demand analysis," History of Political Economy, Duke University Press, vol. 10(4), pages 549-576, Winter.
    16. Olivier Allain, 2009. "Effective demand and short-term adjustments in the General Theory," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00345891, HAL.
    17. Marc Lavoie, 2003. "Real Wages and Unemployment with Effective and Notional Demand for Labor," Review of Radical Political Economics, Union for Radical Political Economics, vol. 35(2), pages 166-182, June.
    18. Casarosa, Carlo, 1981. "The Microfoundations of Keynes's Aggregate Supply and Expected Demand Analysis," Economic Journal, Royal Economic Society, vol. 91(361), pages 188-194, March.
    19. Douglas Vickers, 1987. "Aggregate Supply and the Producers’ Expected Demand Curve: Performance and Change in the Macroeconomy," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 10(1), pages 84-104, September.
    20. Victoria Chick, 1983. "Macroeconomics after Keynes: A Reconsideration of the General Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262530457, December.
    21. Jochen Hartwig, 2004. "Keynes's multiplier in a two-sectoral framework," Review of Political Economy, Taylor & Francis Journals, vol. 16(3), pages 309-334.
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    Keywords

    Keynes's D/Z model; effective demand; Post Keynesianism;
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