Comparing the Mathematical Structure of W. Brian Reddaway's IS-LM Model Contained in His 1936 Economic Record Review of Keynes's General Theory with Keynes's December, 1933 IS-LP(LM) Model and Keynes's IS-LP(LM) Model in Sections IV to VI of Chapter 21 of the General Theory
26 Pages Posted: 24 Oct 2017 Last revised: 8 Feb 2018
Date Written: October 24, 2017
W Brian Reddaway’s IS-LM model ,contained in his 1936 Economic Record paper that reviewed the General Theory, is inferior to both the original December, 1933 Keynes model, originally presented to his students, that Keynes updated in November, 1935 and the 1936 IS-LP(LM) model that Keynes briefly presented in Section IV of chapter 15 and then presented formally in extreme detail in sections IV to VI of Chapter 21 of the General Theory. Keynes, following his usual correspondence style, did not point out to Reddaway that his model was an inferior version of both the original 1933 student notes model, as well as the model contained in Chapter 21 of the General Theory.
Reddaway was misled by his misbelief that Keynes was a Marshallian methodologist and follower of Marshall’s concerning the very limited formal role that mathematics played in an economic analysis. Keynes’s views on the role of formal mathematical analysis were also influenced by Bertrand Russell, Alfred North Whitehead, A. C. Pigou and especially William Ernest Johnson, whose Economic Journal article in 1913 contains extensive mathematical analysis, similar in nature to Samuelson’s 1941 dissertation, that Keynes argued that all economists should be familiar with. Reddaway fixated on Keynes’s comments on pages 297-298 of the General Theory and completely failed, as all other economists after him have failed, to read Section IV of chapter 21 where all of the elements of Keynes’s entire IS-LP(LM) model are brought together and rigorously critiqued and discussed.
Keywords: Harrod, Hicks, IS-LM, Liquidity preference, Patinkin, chapter 15, pp.180-182 of GT, chapter 21, pp.297-303
JEL Classification: B10, B12, B14, B16, B20, B22
Suggested Citation: Suggested Citation