MONEY, MACROECONOMICS AND KEYNES phần 9 ppt

accumulating at a constant rate because their expectations as to the capital–

output ratio are not falsified.

Following Keynes, she reminds us that realised results may not be of any avail

in the decision to replicate investment. Expectations are not checked in the light

of realised results. Investment, therefore, may continue unchanged despite expec￾tations not being confirmed. She has made clear on many occasions why this is

the case. Realised results are not useful information in the decision whether to

carry on with the same investment demand because the circumstances surround￾ing current investment are different from those surrounding past investment.

There is no reason, therefore, why current investment should yield the same

results as past investment.

The contribution offered here takes a slightly different direction as it tries to give

a positive reason why investment demand, or the rate of accumulation, stays con￾stant through time. Procedural rationality is brought into the story to explain why

investors should keep investing at the same rate despite the actual capital–output

ratio is different from the desired ratio. Investors are presented as following a rule

which incorporates the recognition that the aggregation of individual investment

decisions makes investors’ expectations constantly frustrated. Following the rule

offers the opportunity to embark upon the process of adjusting capacity without

being distracted from it by the temporary failing of expectations.

Notes

1 See, among her most recent contributions, Chick (1998a).

2 Chick (1998b: 20).

3 (Ibid., p. 21). See also Caravale (1997) for a discussion of a notion of equilibrium where

no need exists to equate expected and realised results. This article was a major inspira￾tion for Chick’s equilibrium of action.

4 Some of these ideas were already discussed in Caserta and Chick (1997).

5 For a full treatment of the Ramsey model, see, for example, Barro and Sala-I-Martin

(1995, chapter 2), or Romer (1996, chapter 2).

6 See, for a classic example, the interesting discussion Elster (1979) provides of the trav￾eller who, to get out of the forest, chooses a straight line instead of continually adjust￾ing his direction.

7 See Chick (1983: 22).

References

Barro, R. J. and Sala-I-Martin, X. (1995). Economic Growth. New York: McGraw-Hill.

Caravale, G. (1997). ‘The Notion of Equilibrium in Economic Theory’, in G. Caravale

(ed.), Equilibrium and Economic Theory, London, New York: Routledge.

Caserta, M. and Chick, V. (1997). ‘Provisional Equilibrium and Macroeconomic Theory’,

in P. Arestis, G. Palma and M. C. Sawyer (eds.), Markets, Employment and Economic

Policy: Essays in Honour of G.C. Harcourt. London, New York: Routledge. Vol. 2.

Chick, V. (1983). Macroeconomics after Keynes. Cambridge, MA: MIT Press.

M. CASERTA

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Chick, V. (1998a). ‘A Struggle to Escape: Equilibrium in The General Theory’, in

S. Sharma (ed.). John Maynard Keynes: Keynesianism into the Twenty-First Century.

Cheltenham: Edward Elgar.

Chick, V. (1998b). ‘Two Further Essays on Equilibrium’, Discussion Paper in Economics,

UCL.

Elster, J. (1979). Ulysses and the Sirens. Cambridge: Cambridge University Press.

Hargreaves Heap, S. (1989). Rationality in Economics. Oxford: Basil Blackwell.

Harrod, R. F. (1930). ‘An Essay in Dynamic Theory’, Economic Journal, 49.

Romer, D. (1996). Advanced Macroeconomics. London, New York: McGraw-Hill.

TRANSITIONAL STEADY STATES

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