The Aggregative Structure of Keynes's General Theory

Abstract

Perhaps the most startling element in Axel Leijonhufvud's recent reconstruction of Keynes's model in the General Theory is the claim that the model is a two-commodity model.1 Prior to Leijonhufvud's analysis of the question, the standard representation of the Keynesian system was the familiar one-commodity model. During the period since his analysis appeared, Keynesians, as well as researchers seeking to develop models along the lines suggested by other aspects of Leijonhufvud's analysis, have continued to employ one-commodity models.2 Attempts to construct two-commodity macroeconomic models have been motivated primarily by considerations far removed from those dealt with by Leijonhufvud.3 The one-commodity interpretation of the General Theory has been a proposition on which