Being Keynesian in the Short Term and Classical in the Long Term: The Traverse to Classical Long‐Term Equilibrium

We analyse the relationship between the Keynesian (post‐Keynesian, Kaleckian) and classical perspectives, emphasizing the distinction between two time frames, short term and long term. A model is presented in which the traverse to a long‐term classical equilibrium, with prices of production, is obtained as a sequence of short‐term Keynesian equilibria (in which outputs are adjusted to demands). In the short term, prices and capital stocks are constant; they are only adjusted in the long term. Prices respond to disequilibria concerning capacity utilization rates. Investment is subject to a financing constraint, in which the provision of loans by the banking system is involved. Loans are modified in response to inflation (monetary policy).