elasticity of production

["David Dequech" <dequech@xxxxxxxxxxxxxx>]

In response to Kazuhiro:


It is true that the argument of the elasticity of production appears in The
General Theory in the middle of Keynes's discussion of the own-rates of
interest. For the own-rate discussion, a variation in the quantity of an
asset is important, especially since Keynes related the returns on an asset
to its scarcity. However, I argued in my previous post that the elasticity
of production is defined by Keynes (in chapter 17 of the GT)  in terms of a
variation in the quantity of labour employed. Given this definition, the
distinction between endogenous and exogenous
money is not important for the discussion of the elasticity of production.

In my view, if we want to think about how endogenous money relates to the
elasticity of production, two questions must be distinguished:
(1) can (a lot more of) labour be employed to produce (a larger quantity of)
money?
(2) can the supply of money increase?


Cheers,
David Dequech