J M Keynes, Chapter 21 of the General Theory, and the Textbook AD-AS Model. Why Keynes's Suggested Simplifications to His Aggregate Supply Curve Approach in Chapter 21 of the General Theory Were Overlooked
28 Pages Posted: 12 Mar 2018
Date Written: March 9, 2018
J M Keynes discussed a number of simplifications of his D-Z model in chapter 21 of the General Theory that were comparable to the completely (infinitely) elastic range and synthesis ranges of the standard AD-AS model that is provided in Principles and Intermediate macroeconomics textbooks in (O,P) space, where P is the actual price level. Keynes was explicit that these represented simplifications from his AD-AS(D-Z) model as specified in chapter 20 of the General Theory and did not cover the range of analysis that his D-Z model was capable of covering, such as multiple equilibria, expectations, or the impact of uncertainty.
The view that Keynes did not have any formal, mathematical models in the General Theory resulted in his simplified models of his Aggregate Supply Curve being overlooked for the last 82 years.
Keywords: IS-LM, IS-LP(LM), Reddaway, Champernowne, Keynes, chapter 21, chapter 15, Keynes's views of math
JEL Classification: B10, B12, B14, B16, B20, B22
Suggested Citation: Suggested Citation