By O. F. Hamouda
Opposite to the widely perpetuated trust that Keynes's conception is suitable basically to fiscal depressions, the writer of this provocative ebook keeps that Keynes supplied a whole set of macroeconomic family members and the materials of a brand new theoretical version, even more reflective of and analytically acceptable to the twenty first century than these on which present macroeconomics is predicated. With the viewpoint of Keynes because the backdrop, the writer starts with a dialogue of the features of the monetary crises of 2008 and the Thirties. He then is going directly to convey that Keynes supplied a unique, basic concept, built because the EC-SP version (different from that of the Classicals' Labour idea of price version and the neoClassicals' antithetical IS-LM model), a concept but unrecognized as being in the back of either A Treatise on cash and the final conception. He offers the following the premises of Keynes's contributions which nonetheless anticipate use by means of a iteration of economists to re-evaluate macroeconomics and orient it in a brand new course. This exact and authoritative examine Keynes's physique of labor could be a vital learn for students and scholars of economics. someone attempting to comprehend the nation of the 'entrepreneurial economy', of which the 2008 monetary main issue is yet one manifestation liable to recurrence, will locate the paintings a major source.
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Extra info for Money, Investment and Consumption: Keynes’s Macroeconomics Rethought
1(ii), in Keynes’s notation). In The General Theory, Keynes redefined M, the amount of money held by individuals, to be made up of M1, the amount of money needed for transaction purposes, and M2, the amount needed for speculative purposes. While M1 depends on the level of income, Y, M2 depends on the interest rate, r. In his formulation in The General Theory (1936, p. 1(iv)), which, as in the Treatise, Keynes notes as being equivalent to Fisher’s equation (1936, p. 209). 1. Clarification of what is meant by the ‘Quantity Theory of Money’ is now sought.
1(iv)), which, as in the Treatise, Keynes notes as being equivalent to Fisher’s equation (1936, p. 209). 1. Clarification of what is meant by the ‘Quantity Theory of Money’ is now sought. First and foremost to be stated is that the Quantity Theory is not synonymous with the Quantity Equation. What is, however, of intriguing interest here is that across the broad spectrum of pre-World War II monetary theorists, with very differing views, including Wicksell, Fisher, Hayek, and Keynes, what Harrod referred to as the ‘essence’ of the Quantity Theory, ‘that the value of P is the resultant of changes in M’ (1969, p.
As per the Fed’s policy response, the bulk of its money is not aids to fine-tuning the production economy but was earmarked as financial industry bailouts. As the money is released, some of it might filter to the production industry, but it remains to be seen how much will be spent in the domestic realm, and how much will become productive and how much unproductive investment. Furthermore, there is risk that some of it may vanish completely in speculation, as occurred during the 2008 crisis. One final comment is in order.