MAC07 Microfoundations

Why the theory of Effective Demand is confusing, and how we can make sense of it. 
The Lecture explains that Keynes provides a general broad outline -- a model IDEA, and not a model. Within this outline, there are many ways to fill in the details -- these are the so-called Microfoundations for Keynes. Depending on HOW we fill in the details, we can get to different types of models with different types of phenomena, which may be called effective demand. This means that microfoundations, left unspecified by Keynes, matter in both the interpretation of his theory of effective demand, and also in terms of whether or not the central phenomena: an equilibrium at which unemployment exists - can be demonstrated within the model. 

MAC07 MicroStructure



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ILO Publications Home Page  Sep 22, 2018, 5:44 PM Asad Zaman
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Lecture explains how many different specialized models fit into broad outlines of Keynesian framework, but have radically different implications about outcomes, with respect to unemployment and split of share between capital and labor  Sep 26, 2018, 1:56 AM Asad Zaman
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