The Comparative Statics of Effective Demand. Issue 3 (3rd July 2017)

• Record Type: Journal Article
• Authors: Hartwig, Jochen
• Is Part Of: Review of political economy. Volume 29:Issue 3(2017)
• Page Start: 360
• Page End: 375
• Publication Date: 2017-07-03
• Subjects: Effective demand -- D/Z model -- Keynes; B31 -- E12; Economics -- Periodicals; Web sites; 330
• DOI: 10.1080/09538259.2017.1352191
• Languages: English
• ISSNs: 0953-8259

Abstract

ABSTRACT: Keynes introduces the term 'effective demand' in Chapter 3 of the General Theory as designating the point of intersection of two functions: the 'aggregate demand function' ( D ) and the 'aggregate supply function' ( Z ). For the first time in the literature, I here use specific functional forms for the D and Z functions and run numerical simulations which allow study of the comparative statics of the model in the face of various 'shocks'. The demonstration of how the D / Z model actually works will hopefully prove useful for future students of the economics of Keynes.