Keynes and Conventional Equilibria

  • Bruce Littleboy


Two ideas about Keynes’s views on unemployment equilibrium have found support. The first is the strident claim that there can exist in logic a vector of prices and quantities which would persist in the long run were it not for the likelihood in practice of exogenous shocks in a world of uncertainty and flux. The second idea identifies Keynes’s insight as one where short-run unemployment states can be protracted and where the automatic restoration of full-employment equilibrium involves a tediously slow and irregular process of adjustment. Patinkin1 and Clower2 can be associated with the latter, more widespread, view.


Interest Rate Real Wage Full Employment Price Expectation Money Wage 
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© Mario Sebastiani 1992

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  • Bruce Littleboy

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