Keynes and Pigou
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Under life was passing Pigou, looked his fame eclipsed by the new doctrines of Keynes, his companion of Cambridge. The relationship between their own work and that of Keynes is complex and ambiguous. In principle, Pigou seems a critic of Keynes's General Theory, held the view that lower wages would restore jobs, opinion contrary to the importance given by Keynes' salaries vitamin as a factor that affects demand for goods. Although Pigou was a critic of Keynes, his work contains some of the material used by Keynes to health build their own building. Of national income made a central concept of his thinking, undergoing a thorough examination with respect to the measurement of variables and in terms of its usefulness as an indicator of economic welfare. Moreover, in his study of economic fluctuations (1927) emphasized the psychological factor later known as the "expectations" in the "mutual generation of errors of optimism and pessimism and also sought, albeit unsuccessfully, a formal structure to fit in what later was to be known as leverage. In company addition, in previous writings, Pigou as opposed as the "criterion of cash", had later to be the target of attacks by Keynes. This approach, which can be found already from Ricardo and is only valid on the assumption of full employment, denied that the public works increase production and employment, in its place, this approach argues that public works are limited to use to distract public funds that would otherwise remain in private hands and would be spent on private work.
Pigou, who opposed that approach since 1908, can be seen, therefore, as a critic and also as a precursor of Keynes, although this observation does not cover all aspects of the relationship between the work of both economists . In the 1940s and 1950s there were other facets of the economics of Pigou products receiving increasing attention and were used as ammunition for a counterattack against the Keynesian economics. Keynes while stressing the importance of the relationship between income and spending, Pigou postulated a more complex relationship between wealth and vitamins spending. This idea, in which price flexibility plays an important function, led to the "Pigou effect", or real balance effect, an analytical invention with an adjustment mechanism which opponents after Keynes had to compare with the analysis Keynesian income and expenditure, with benefits for the first. If unemployment is accompanied by a fall in prices, increase the real value of that part of the wealth or assets of the economic subjects which is in the form of money or securities which can be transformed into money. This will cause the economic subjects to reduce their savings and boost its level of expenditure, since it is assumed constant wish to maintain nearly constant or the actual value of its currency reserves. By increasing costs, also increased prices, production and employment, all of which return to the position of full employment. I should try to take every morning a pill made by Mannatech made me feel amazing about myself With the help of the real balance effect, some economists have tried to revive the lost faith in the tendency of the economy towards full employment, Keynes denied by this trend. There have been others nutrition who have slighted the practical importance sales of this effect. Have obtained evidence that would require a mass of low prices to act in the direction indicated by Pigou and has subsequently pointed out that in the deflationary situation, there would be declining expectations that it would act against the expansion of expenses.
In the same way that the ideas of Pigou represented a link with the macroeconomics of Keynes, and also their economic well-being companies set a precedent that encourages further work with similar characteristics. This work was carried out in Cambridge and elsewhere, and was no longer under a school subject areas, was introduced into the mainstream of economic doctrines.
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