Income–Expenditure Analysis

Abstract

The term ‘income–expenditure analysis’ serves as a short-hand expression for the dominant type of conceptual framework for macroeconomic analysis to emerge from the debate which crystallized around Keynes’s General Theory (Keynes 1936). As Coddington (1976) notes, income-expenditure analysis was not the only thing to be learned from the General Theory, but it has certainly been the dominant one, forming the central message of Keynesian economics as generally understood. Although the term does not appear to have been used by Keynes himself it is to be found, freely used, in the early works of exposition of the General Theory and the Keynesian Revolution. At the formal and simplest level it can be taken to refer to the 45° ‘Keynesian Cross’ diagram, at a more sophisticated level to the IS/LM analysis.