This paper is a non-technical and somewhat philosophical essay, that seeks to investigate the relationship between economics and reality. More precisely, it asks how reality in the form of empirical evidence does or does not influence economic thinking and theory. In particular, which role do...

The conventional wisdom about Keynes's Principle of Effective Demand is that it states something about quantities. It is widely held that the Principle determines the levels of output and employment in a world not governed by Say's Law. This paper argues that the Principle of Effective Demand...

In this paper, the authors discuss Minsky's analysis of the evolution of one variety of capitalism-financial capitalism-which developed at the end of the nineteenth century and was the dominant form of capitalism in the developed countries after World War II. Minsky's approach, like those of...

In 1936, Keynes published The General Theory of Employment, Interest and Money, one of the most influential books in economics of the twentieth century. With this publication, Keynes has confused and will continue to confuse generations of economists as to what classical economics means. This...

Keynes’s mathematical economics analysis of the Aggregate Supply Function and the Aggregate Supply Curve contained in footnote two on p.55 of the General Theory is correct with the exception of a very minor error that can easily be spotted by anyone who has worked through Keynes’s chapter 20...

Nowadays monetary economists derive optimal policies by solving a Ramsey problem. In this paper I explore the historical context in which this concept of optimality emerged. This approach developed from two ideas. First, economists characterized inflation as a tax on money holdings in the...

A system of thought allowed for the free market price of land to cyclically go down to zero. This is the economics of Moses. The economics of Jesus is a restatement of the economics of Moses. The first was applied during Biblical times and the latter, united with Aristotle’s thought and...

Two common claims about mid-to-late twentieth century economics are that Walrasian ideas had an influence on the particular version of Keynesian macroeconomics that became dominant during the 1950s and 1960s, and that Walrasian general equilibrium theory passed its zenith in microeconomics at...

The General Theory of Employment, Interest and Money by John Maynard Keynes led up to three cross-shaped graphical interpretations: the IS-LM model, the 45º model and the Z-D model. The first one was originated from Hicks (1937) well-known paper, despite the differences between his original...

Pareto based his interpretation of business cycles on a disaggregated general equilibrium system with dynamics determined by frictions (or “inertia”). The present article investigates his interpretation of the motion of the economic aggregate, in the sense of the set of individual consumers...