KEYNES and THE KEYNESIANS ON THE FISHER EFFECT

This paper examines the treatment of the Fisher effect in Keynes's General Theory and in various Keynesian and post-Keynesian writings. It is argued that Keynes was not entirely fair to Irving Fisher but, nonetheless, that the General Theory provides the basis for a critique of Fisher's argument. Models due to R. A. Mundell and T. Sargent are analyzed, clarified, and used to identify the basis for a Keynesian rationalization of a lagged and partial Fisher effect--a rationalization superior to Fisher's own, which ran in terms of long lags in expectations formation. Post-Keynesian contributions stemming from R. Harrod are examined and criticized on the grounds of their incompleteness.