Reading Keynes’s Policy Papers Through the Prism of His Treatise on Probability

Information, Expectations, and Revision of Probabilities in Economic Policy

Bibliographic Data

ID21634786
AuthorsSylvie Rivot (Université de Haute-Alsace, corresponding author)
Year2021
Volume43
Issue4
Pages604-618
Publication date2021-12-01
Peer ReviewedYes
Open AccessYes
TypeARTICLE
VenueJournal of the History of Economic Thought (JOURNAL)
Journal identifiersISSN: 1053-8372 • E-ISSN: 1469-9656
PublisherCambridge University Press (CUP) (PUBLISHER)
DOI10.1017/s1053837221000377
OpenAlexW3215954693
LanguageEN
Citations received1
References cited23

When scholars investigate the legacy of John Maynard Keynes’s Treatise on Probability (1921) for the development of Keynes’s thinking, the attention usually focuses on the connections among Keynes’s probability theory, his conception of decision-making under uncertainty, and the theory of the functioning of the macroeconomic system that derives from it—through the marginal efficiency of capital, the preference for liquidity, and the self-referential functioning of financial markets. By contrast, this paper aims to investigate the connections between Keynes’s probability theory, on the one hand, and his economic policy recommendations, on the other. It concentrates on the policy recommendations defended by Keynes during the Great Depression but also after the General Theory. Keynes’s economic policy can be understood as a framework for decision-making in situations of uncertainty: fiscal policy aims to induce private agents to change their “rational” probability statements, while monetary policy aims to allow more weight to these statements

Economics · Liquidity preference · Macroeconomics · Market liquidity · Microeconomics · Political science · Positive economics · Preference · Rational expectations · Economic Theory and Institutions · Economic Theory and Policy · Political Economy and Marxism

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