The Elgar Companion to John Maynard Keynes
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The Elgar Companion to John Maynard Keynes

Edited by Robert W. Dimand and Harald Hagemann

The most influential and controversial economist of the twentieth century, John Maynard Keynes was the leading founder of modern macroeconomics, and was also an important historical figure as a critic of the Versailles Peace Treaty after World War I and an architect of the Bretton Woods international monetary system after World War II. This comprehensive Companion elucidates his contributions, his significance, his historical context and his continuing legacy.
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Chapter 80: Robert W. Clower

Peter Howitt


Robert Clower (1926–2011) was an American economist who criticized both conventional general equilibrium theory and mainstream Keynesian theory for failing to provide a conceptually coherent account of the market mechanisms that coordinate the economic plans of different economic actors. He offered several suggestions for constructing such an account. The first was his “dual decision hypothesis”, according to which the failure of unemployed workers to execute their desired sales of labor-services constrains their consumption demands. In the 1970s and 1980s, this suggestion inspired a large literature on “general disequilibrium analysis”. The second was his “dichotomized budget constraint”, which took into account that an individual’s market demands were constrained by the individual’s ability to acquire cash. This suggestion led to the branch of modern theory known as “cash-in-advance”. Starting in the 1990s, he argued for “general process analysis”, which focused on market-making firms and used an agent-based methodology.

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