chapter  3
30 Pages

Information in the General Theory

ByChristopher Torr

This chapter focuses on what the model-builder knows as opposed to what the agents in his model are presumed to know. The information at the disposal of the agents in the model obviously depends on what the model-builder allows them to know. The question of inter-firm information is related to the link between micro- and macroeconomics. Entrepreneurs entertain certain expectations of sales proceeds, which Keynes links to employment levels. The question that immediately arises is whether the agents in the model should be aware of such inter-firm relationships. The model-builder uses an inter-firm guesswork assumption when he derives the aggregate schedules. The information the model-builder makes available to the agents in the model has some bearing on the link between the micro- and macro-levels. In effect the agents are provided with information as to how the system operates which is by definition identical to the model-builder’s view of how the system operates.