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The comparative statics of effective demand

Jochen Hartwig

No 3, from Department of Economics, Chemnitz University of Technology

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 specify exact functional forms for the D and Z functions and run numerical simulations which allow to study 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.

Keywords: Keynes; effective demand; D/Z model (search for similar items in EconPapers)
JEL-codes: B31 E12 (search for similar items in EconPapers)
Date: 2017-03, Revised 2017-03
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Published in Chemnitz Economic Papers, February 2017, pages 1-21

Downloads: https://www.tu-chemnitz.de/wirtschaft/vwl1/RePEc/d ... tivestaticsED_v3.pdf First version, 2017 (application/pdf)

Persistent link: http://EconPapers.repec.org/RePEc:tch:wpaper:cep003

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