By Masayuki Otaki
This e-book reconsiders Keynes’s The normal concept of Employment, curiosity and Money and establishes a brand new interpretation. not like the prevailing versions, this e-book reveals that the stickiness within the nominal salary isn't really the most important for his conception. additionally, the writer has additionally succeeds in taking pictures the concept that of liquidity in a rigorous mathematical version. together with the improvement of the concept that of liquidity, the separation of the choice among mark downs and capital funding, which performs a key position within the precept of potent call for and denies Say’s legislations, is precisely and initially formulated.
The conception hence built is acceptable to elucidating a few severe political monetary motives that entrap the long-stagnated eastern economic climate. for instance, an analytical clarification is equipped approximately why disinflation/deflation continuously progresses regardless of the exorbitant expansionary financial coverage (ijigen kin-yuu seisaku) through the financial institution of Japan. This phenomenon is an unsolvable query from the quantity-theoretic methods (e.g., monetarism and new Keynesianism) which, even though they range in assumptions in regards to the size of adjustment sessions, regularly imagine that the associated fee point eventually rises in percentage to the amount of money.
Owing a lot to Keynes, the author’s process considers that the associated fee point is principally ruled via its marginal best expense that is equivalent to the nominal salary as a primary approximation. As such, the vastly sagging wages in past times 10 years galvanize severe disinflation/deflation. it's going to be famous that this dialogue by no means will depend on the volume of money.
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Additional info for Keynes’s General Theory Reconsidered in the Context of the Japanese Economy
That is, a borrower tends to bear excessive risk under the limited liability because the loss from the failure in investment is localized by such a contract; thus, the borrower is likely to prefer high-return and high-risk projects. This concept also includes intentional bankruptcy due to the borrower’s opportunistic behavior. This situation may be important, especially when inefﬁcient management practices such as perquisites or free cash flow of the employer originating from the loan are not veriﬁable.
M. (1944). English social history: A survey of six centuries, Chaucer to Queen Victoria (Reprint, London: Book Club Associates, 1973). Chapter 3 Analyzing Book II of The General Theory Abstract This chapter considers Book II in The General Theory. Book II is a preparatory introduction for the remaining books. When one looks back on the era of The General Theory in which the foundation of macroeconomics was still under development, one necessarily ﬁnds that the deﬁnition of macroeconomic variables should be clariﬁed before any essential discussion.
Chapter 6 (“The Deﬁnition of Income, Saving and Investment’’) intends to emancipate the relationship between capital investment and savings by using an unfamiliar concept of user cost. This chapter seems to have been necessary because the system of national accounts (SNA) was not yet developed. The concept of user cost is deﬁned as the difference between the optimum monetary value of existing capital goods, which are deﬁned under the condition that they are preserved as 1 As Keynes correctly discusses, short-term expectation becomes necessary because there is a substantial production period.