J. Hicks's 'Famous' IS-LM Figures 1 and 2 on Page 153 of His 1937 Econometrica Paper are Based Directly on Page 207 of the General Theory
22 Pages Posted: 6 Oct 2017
Date Written: October 6, 2017
Hicks’s 1937 interpretation of Keynes’s 1936 General Theory IS-LP(LM) model, which was analyzed in (r,Y) space by Keynes, in which Hicks used his IS-LL model in (Y,r) space, where we use Keynes’s Y for income and not Hicks’s I for income, supposedly generated much more interest and following because of the existence of two figures, Figure 1 and Figure 2, on p. 153 of his article.
However, Hicks’s analysis on pp.153-154 of his 1937 paper is practically identical to that of Keynes’s on pp.200-202, 207 and p.298 of the General Theory. Keynes provides a specific, written description of the LP curve, Hicks’s LL curve, which is identical to Hicks’s graphical presentation. Hicks’s description of his figure’s appearance is done without citing Keynes’s technical description on page 207 of the General Theory. Hicks only cites pp.200-201 of the General Theory.
Hicks’s analysis on pp.153-154 of his 1937 article does not improve in any technical way over Keynes’s analysis unless one claims that graphical displays are superior to mathematical description.
Keywords: Harrod, Hicks, Keynes, IS-LM, Liquidity preference, QJE 1937, chapter 15, pp.180-182 of GT, chapter 21
JEL Classification: B10, B12, B14, B16, B20, B22
Suggested Citation: Suggested Citation