Empiricism and the Keynesian tradition

Article Abstract:

Keynesian economists take pride in the superiority of their approach to economic analysis to that of the neoclassical school since Keynesian models are posited in the real world and carry historical weight. The application of empirical data to these models, however, has not proven to be an unmitigated success. Methodological problems have cropped up which have led economists to rely on older axiomatic and probabilistic models. John Maynard Keynes never really intended to break completely with the classical school of economics since he did not believe in statistical verification as the ultimate means to prove the effectiveness of economic models.

Empiricism

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The notion of disequilibrium, the multiplier, and the endogenous supply of money

Article Abstract:

John Maynard Keynes' theory explaining the relationship between the buffer stock adjustment principle and equilibrium raises some problems. According to the Keynesian theory, inventories of finished goods increase when aggregate supply exceeds aggregate expenditures in a given time period, prompting businesses to reduce production until they offer employment whose level is consistent with equilibrium. This principle, however, fails to consider variations in working capital as well as the relationship between the endogenous supply of money and the processes of output adjustment.

Money supply, Supply and demand, Equilibrium (Economics), Multipliers (Economics), Working capital

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A classical-Keynesian model of macroeconomic fluctuations

Article Abstract:

A macroeconomic model showing how the capitalist economy creates business cycles in an endogenous manner is presented. Relationships affecting market economies, such as competing claims on income, wage-profit relation and the investment-profits interdependence are shown in the model. Such relationships hinder full employment and equilibrium predicted by the neoclassical theory.

Models, Business cycles, Capitalism, Macroeconomics, Neoclassical economics

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