The Keynesian Approach
In this chapter we will study the derivation of the investment function following from Keynes’s General Theory. It was clarified and elaborated by Lerner  and Witte . The essence of this approach is that rising costs in the capital goods supplying industry provide a determinate macro investment function, although a micro investment function cannot be derived. To return to the format suggested in the Introduction, we have two problems: (a) what is the optimal capital stock K* and (b) how does the actual capital stock K adjust towards the optimal capital stock, i.e. can we say anything about F?
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