Keynes's Z function, heterogeneous output and marginal productivity |
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Authors: | Hayes MG |
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Affiliation: | * Homerton College, University of Cambridge |
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Abstract: | Keynes was adamant that the assumption of homogeneous outputand capital in macroeconomic theory is inadmissable. His aggregatesupply or Z function is a generalisation of Marshall's ordinarysupply function to take account of heterogeneous output, andis an essential element of the principle of effective demand.The linear Z curve controversy can be attributedto Keynes's desire to demonstrate how his general monetary theoryof value and output encompasses the special case of Classicaltheory, including the marginal productivity theorem. The infamoussecond footnote on pages 55–6 of The General Theory canthereby be fully resolved. |
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Keywords: | Keynes Marshall Aggregate supply Marginal productivity Heterogeneity |
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