Department of Economics. University of Melbourne. Parkville Victoria
3052 Australia
ABSTRACT
This paper is in four sections. The first deals with the theory of
profits to be found in the Treatise on Money and other work by Keynes
written in the early thirties. The second section looks at the important
role of the Macro theory of profits in his General Theory of Employment
Interest and Money. I argue that for Keynes, Macro demand shocks are
profit shocks and it is for that reason that aggregate output and employment
respond to variations in aggregate demand. The third section argues that,
in this context at least, Keynes was a 'mild' rational expectations theorist,
a matter often overlooked when people write about Keynes's treatment of
uncertainty and expectations. The last section offers some concluding remarks.
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