FMM Working Paper

: The comparative statics of effective demand

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.


Hartwig, Jochen: The comparative statics of effective demand
FMM Working Paper, 22 Seiten

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