The Marginal Efficiency of Investment

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Abstract

The author looks at Keynes's concept of the marginal effiiency of capital in Book IV of The General Theory, which is meant to analyse the factors determining 'The Inducement to Invest'. Keynes singles out two major sources of inducement. First : the state of long-term expectations' - the result of entrepreneurs' 'animal spirits - and a spontaneous urge to action rather than inaction'. It is 'autonomous', with respect to formal economic analysis. Second: a careful economic calculus. Let us call it 'endogenous' investment. It is with reference to the endogenous source of investment that Keynes coins the analytical concept of the 'marginal efficiency of capital'.
Lingua originaleEnglish
Titolo della pubblicazione ospiteA “Second Edition” of the General Theory
EditorGeoffrey Harcourt, Peter Riach
Pagine198-218
Numero di pagine21
Stato di pubblicazionePubblicato - 1997

Keywords

  • Animal Spirits and monetary policy
  • Criticism of orthodox savings-supply function
  • Keynes and the marginal efficiency of capital
  • Keynes' theory of the rate of interest
  • The General Theory of employment restated

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