Abstract
Section I of this book outlined the analytical apparatus known as the neoclassical-Keynesian synthesis, which evolved through the debates conducted in the twenty years following The General Theory’s publication. Hahn ([1] p. 26) succinctly summarises the neoclassical-Keynesian synthesis:
Keynes attempted to show that full-employment short-period equilibrium did not exist and in this he was, under plausible assumptions, wrong. His mistake was attributed to his neglect of real cash balances in influencing the demand for current goods.
The ‘synthesis’ reconciled Keynes’s theory with that of the neoclassical school (or ‘classics’, in Keynesian terminology). In doing so it reduced Keynes’s theoretical contribution to the unoriginal observation that markets could not adjust to full-employment equilibrium if prices, in particular money wages, were inflexible.
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References
F. Hahn, ‘Keynesian Economics and General Equilibrium Theory: Reflections on Some Current Debates’, in G. Harcourt (ed.), The Microeconomic Foundations of Macroeconomics (London: Macmillan, 1977).
R. W. Clower, ‘The Keynesian Counter-Revolution: a Theoretical Appraisal’, in F. H. Hahn and F. Brechling (eds), The Theory of Interest Rates (London: Macmillan, 1965);
reprinted in P. G. Korliras and R. S. Thorn (eds), Modern Macroeconomics (New York: Harper & Row, 1979).
A. Leijonhufvud, On Keynesian Economics and the Economics of Keynes (Oxford University Press, 1968).
L. Walras, Elements of Pure Economics, trans. W. Jaffe (Homewood, Ill.: Irwin, 1954); original publication 1874.1
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E. R. Weintraub, The Microfoundations of Macroeconomics (Cambridge University Press, 1979).
L. Harris, Monetary Theory (New York: McGraw-Hill, 1981) chs 4, 5, 14.
J. R. Hicks, ‘Mr. Keynes and the Classics: A Suggested Interpretation’, Econometrica, 5 (1937).
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D. Patinkin, Money, Interest and Prices, 2nd edn (New York: Harper & Row, 1965).
Joan Robinson, Economic Heresies (London: Macmillan, 1971).
G. L. S. Shackle, The Years of High Theory (Cambridge University Press, 1967).
Further reading
Clower [2], Weintraub [7] and Harris [8].
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© 1982 Rosalind Levačić and Alexander Rebmann
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Levačić, R., Rebmann, A. (1982). Walrasian and Keynesian Adjustment Mechanisms. In: Macroeconomics. Palgrave, London. https://doi.org/10.1007/978-1-349-86044-9_16
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DOI: https://doi.org/10.1007/978-1-349-86044-9_16
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