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Keynes' Aggregate Supply Function and the Principle of Effective Demand

Published online by Cambridge University Press:  17 August 2016

Rodolphe Dos Santos Ferreira  and
Philippe Michel
Rodolphe Dos Santos Ferreira
Affiliation:
Université Louis Pasteur, Strasbourg I
Philippe Michel
Affiliation:
Université de Paris I
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Summary

The principle of effective demand decomposes in two distinct propositions, one pertaining to the analysis of actual, the other to the analysis of equilibrium states. The authors suggest that Keynes' apparatus of aggregate supply and demand decomposes correspondingly in two pairs of aggregate functions. They thus extend to the supply side a duality which had already been noticed on the demand side. Such an extension leads to a reconsideration of the debate between two conflicting views of the aggregate supply function which originated in Patinkin's contributions. The authors' argument emphasizes the role of aggregation over optimizing producers, and the status of intermediate goods and imperfect competition.

Résumé

Résumé

Le principe de demande effective se décompose en deux propositions distinctes, l'une s'intégrant dans l'analyse des états effectifs, l'autre dans celle des états d’équilibre. Les auteurs suggèrent que l'appareil de l'offre et de la demande globales mis en place par Keynes se décompose, de manière correspondante, en deux couples de fonctions. Ils étendent ainsi à l'offre la dualité qui avait déjà été remarquée pour ce qui est de la demande. Une telle extension conduit à un réexamen du débat entre deux conceptions opposées de la fonction d'offre globale, qui a pris naissance dans les contributions de Patinkin. Le raisonnement des auteurs met l'accent sur le rôle de l'agrégation des comportements d'optimisation des producteurs, ainsi que sur le statut des biens intermédiaires et de la concurrence imparfaite.

Keywords

023031023031
Type
Research Article
Information
Recherches Économiques de Louvain/ Louvain Economic Review , Volume 57 , Issue 2 , 1991 , pp. 159 - 187
Copyright
Copyright © Université catholique de Louvain, Institut de recherches économiques et sociales 1991 

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Footnotes

(*)

We thank Cl. d'Aspremont, R. Gary-Bobo and G. Koenig for helpful comments on earlier versions of this article. The authors are of course responsible for any remaining errors and obscurities.

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