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Arthur Cecil Pigou (/ ˈ p iː ɡ uː /; 18 November 1877 – 7 March 1959) was an English economist.As a teacher and builder of the School of Economics at the University of Cambridge, he trained and influenced many Cambridge economists who went on to take chairs of economics around the world.
Following the tradition of classical economics, Pigou favoured the idea of "natural rates" to which the economy would return in most cases, although he acknowledged that sticky prices might still prevent reversion to natural output levels after a demand shock. Pigou saw the "Real Balance" effect as a mechanism to fuse Keynesian and classical ...
However, Pigou retained free market beliefs, and in 1933, in the face of the economic crisis, he explained in The Theory of Unemployment that the excessive intervention of the state in the labor market was the real cause of massive unemployment because the governments had established a minimal wage, which prevented wages from adjusting ...
John Maynard Keynes attacked some of these "classical" theories and produced a general theory that described the whole economy in terms of aggregates rather than individual, microeconomic parts. Attempting to explain unemployment and recessions , he noticed the tendency for people and businesses to hoard cash and avoid investment during a ...
The Pigou–Dalton principle (PDP) is a principle in welfare economics, particularly in cardinal welfarism. Named after Arthur Cecil Pigou and Hugh Dalton, it is a condition on social welfare functions. It says that, all other things being equal, a social welfare function should prefer allocations that are more equitable. In other words, a ...
The Downs–Thomson paradox (named after Anthony Downs and John Michael Thomson), also known as the Pigou–Knight–Downs paradox (after Arthur Cecil Pigou and Frank Knight), states that the equilibrium speed of car traffic on a road network is determined by the average door-to-door speed of equivalent journeys taken by public transport or the next best alternative.
China’s slowing growth, real estate crisis, high youth unemployment, and U.S. restrictions on key technologies have led to predictions of a so-called lost decade of stagnation.
He explained that firms operate at less than full capacity due to falling demand curves and maximization of profits at a certain output level. Robinson highlights the limitations and simplifications made in Pigou's analysis, particularly in terms of assumptions about demand conditions and the concept of price policy in manufacturing industries. [1]