Garrison on Keynes

Volume 18, Number 1 (Spring 2015)

ABSTRACT: This paper examines Roger W. Garrison’s interpretation of John Maynard Keynes. Garrison has given economists a useful way to illustrate Keynes’s theory, but there are two fundamental problems with Garrison’s interpretation. First, the shape of the Hayekian triangle cannot be fixed in Keynes’s theory. Second, Garrison’s interpretation contradicts the IS-LM model. The demand constraint is derived from the IS-LM model and the IS-LM demand constraint is used to illustrate Keynes’s theory.

KEYWORDS: John Maynard Keynes, Roger W. Garrison, IS-LM model, Hayekian triangle, capital-based macroeconomics, Keynesian demand constraint, socialization of investment

JEL CLASSIFICATION: E12, E22, E32, E43, E52, P20, B22