Clower on Effective Demand

Abstract

This note examine's Clower's recent criticisms of Keynes' theory of effective demand and argues that Keynes added much to Marshallian theory when he extended to the aggregate level, that his theory does have implications for unemployment without requiring wage rigidity, that his theory does not depend on the non-clearance of the good market, and the main difference between Keynes and the Keynesians concerns the consequences of wage-price flexibility.Effective Demand