"Relative Movements of Real Wages and Output": How does Keynes's 1939 essay relate to his Principle of effective demand?

Arbeitspapier

Keynes's essay "Relative Movements of Real Wages and Output" is widely believed to be an important amendment to his General Theory because, in this essay, Keynes relaxed his core assumption of decreasing marginal returns to labour. Non-decreasing marginal returns, however, do not sit comfortably with the prime innovation of the General Theory: the Principle of Effective Demand. This will be demonstrated by performing - for the first time in the literature - numerical simulations with Keynes's Aggregate-Demand-Aggregate-Supply (D/Z) model. The view that Keynes's 1939 essay constitutes an important amendment to his General Theory thus has to be put into perspective.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: KOF Working Papers ; No. 355

Classification and Topics

• Classification: Wirtschaft ; History of Economic Thought: Individuals ; General Aggregative Models: Keynes; Keynesian; Post-Keynesian
• Subject: Keynes ; effective demand ; D/Z model ; marginal returns to labour

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Hartwig, Jochen
• Event: Veröffentlichung
• (who): ETH Zurich, KOF Swiss Economic Institute
• (where): Zurich
• (when): 2014

Further information

• DOI: doi:10.3929/ethz-a-010111028
• Handle: http://hdl.handle.net/10419/102971
• Last update: 10.03.2025, 11:43 AM CET