Abstract
To many economists Keynesian economics deals with important relevant problems and General Equilibrium theory deals with no relevant problems at all. This view is often the consequence of the ease of learning Keynesian macro-arithmetic compared with reading Debreu. But it also has, alas, an element of truth. This is quite simply that General Equilibrium theorists have been unable to deliver one half at least of the required story: how does General Equilibrium come to be established? Closely related to this lacuna is the question of what signals are perceived and transmitted in a decentralised economy and how? The importance of Keynesian economics to the General Equilibrium theorist is twofold. It seems to be addressed to just these kinds of questions and it is plainly in need of proper theoretical foundations.
The history of this paper is as follows. In 1974 I delivered an invited address to the Econometric Society meeting at Grenoble on ‘Money and General Equilibrium’. The editor of this present volume kindly asked me to make this paper available even though I was unable to attend the I.E.A. Conference. On rereading it in 1976, I found that it did not deal with what I now think most important. I accordingly have completely rewritten it and this paper is the result.
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Hahn, F.H. (1977). Keynesian Economics and General Equilibrium Theory: Reflections on Some Current Debates. In: Harcourt, G.C. (eds) The Microeconomic Foundations of Macroeconomics. Other International Economic Association Publications Series. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-03236-5_2
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DOI: https://doi.org/10.1007/978-1-349-03236-5_2
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