Keynes' Illusionary Multiplier Theory
7 Pages Posted: 25 Jun 2013 Last revised: 10 Mar 2014
Date Written: June 24, 2013
Abstract
Keynes uses income to derive his consumption function and spending multiplier. This paper proves that he also needs interest rate to foster a positive consumption line. However, when the majority of households are included, such positive possibility is ruled out.
Keywords: Saving, Consumption, Interest Rate
JEL Classification: D91, E21
Suggested Citation: Suggested Citation
Choi, Hak, Keynes' Illusionary Multiplier Theory (June 24, 2013). Available at SSRN: https://ssrn.com/abstract=2284095 or http://dx.doi.org/10.2139/ssrn.2284095
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