A Guide to Keynes (Economic Handbooks)

By Alvin H. Hansen

Book Overview

CONTENTS: Book One - Introduction; Book Two - Definitions and Ideas; Book Three - The Propensity to Consume; Book Four - The Inducement to Invest; Book Five - Money Wages and Prices; Book Six - Short... This description may be from another edition of this product.

• Format: Paperback
• Language: English
• ISBN: 0070852995
• ISBN13: 9780070852990
• Release Date: January 1953
• Publisher: McGraw Hill
• Length: 237 Pages
• Weight: 1.15 lbs.

Customer Reviews

Hansen never realized that there are two models in the GT

Alvin Hansen's A Guide to Keynes is helpful to a beginning student who is not familiar with the particular style of exposition Keynes used in writing the General Theory(1936),which was to minimize the mathematical exposition by putting the mathematical analysis in footnotes and in chapters at the end of the book.Keynes then sought to give an extended literary exposition of the mathematical results that would allow the greatest number of practicing 1930's economists and educated laymen to grasp his major points and thus take part in a critical discussion of 1930's economic theory based on an understanding of the basic points of dispute that he had with then current neoclassical theory that had been given its most rigorous exposition by Keynes's great rival,A C Pigou.Keynes introduced his first model,the expected results D-Z model, in chapter 3 of the General Theory(1936).This chapter contains a brief introduction to the full scale mathematical model analyzed in chapters 19(appendix to chapter 19),20,and 21.The other model used by Keynes,the actual results model of chapter 10,is the only model that is considered by Hansen.Hansen essentially skips chapters 19,20,and 21.Hansen then attempts to integrate Keynes's introductory comments about his expected results model in chapter 3 into the formal model of chapter 10.A similar approach was taken by Murad in his 1962 book,What Keynes Means.The result is that an intellectual quagmire was created.This is easily shown.Keynes defined the expected aggregate supply function Z(=Z1+Z2)=P+wN,where P is expected profit,w equals the money wage,and N equals aggregate employment.Keynes defined the expected aggregate demand function D(=D1 +D2) to be equal to pO,where p is an expected price and O is real output,which is a function of total employment.Setting D=Z allows one to obtain the aggregate supply curve ,which is a locus of expected results .All of the points on the D=Z locus satisfy the necessary and sufficient conditions for optimality,assuming that the expectations are operative.The aggregate supply curve defines a set of multiple equilibria.The actual aggregate demand curve is defined in chapter 10 as Y =PO=C+I,where C= a+bY(or just bY)and,in the context of the model of chapter 10,P equals the actual price.Hansen now commits the fatal error of conflating Y with D.For Hansen,D=PO=C+I.Hansen then conflates Z=PO with Z=P+wN and the "What did Keynes really(really) mean"industry(both pro and con)was born.This industry,which is based on incorrectly defined mathematical functions,is still going strong today.Hansen's guide does get the other chapters of the GT right.A reader ,who is mathematically trained in differential and integral calculus ,can simply go to pp.55-56,ft.2 and integrate Keynes's derivative in order to obtain Z and/or go to pp.282-286 to get the correct specification for D and Z,either by simply following Keynes's straightforward definitions or by integrating the derivatives.Such a reader can t

Wonderful Complement to The General Theory

For those students reading Keynes's General Theory who are having a tough time, Hansen's book provides a clear explanation of Keynes's points broken down into a chapter-by-chapter detail. Furthermore, Hansen points out where Keynes was mistaken. Fifty years after it was written Hansen's Guide still continues to be a wonderful complement to The General Theory.