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Faculty of Economics

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Hayes, M.G.

The state of short-term expectation.

Review of Political Economy

Vol. 25(2) pp. 205-224 (2013)

Abstract: The claim that Keynes makes a tacit assumption in Chapter 3 of The General Theory, that short-term expectations are fulfilled, is unwarranted and unnecessary. Kregel's seminal 1976 paper and its subsequent development by Chick and others have contributed to the general acceptance of this claim; these contributions are critically evaluated in the present paper. This critique clears the ground for a recognition that Keynes instead adopted the assumption of judicious foresight, which would now be called short-term rational expectations. That recognition in turn should encourage a reappraisal of Keynes's thought, by mainstream economists and others.

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