ABSTRACT
Due to his activities at the British Treasury and at the University of Cambridge, John Maynard Keynes became one of the leading economists of the 20th century. Keynes wrote that 'profits having once come into existence become the mainspring of change in the existing economic system'. When Keynes passed away in 1946, a number of economists were still seeking to clarify the issues left unclear or unsolved by The General Theory. New Keynesian models work under the hypothesis that supposed nominal frictions or imperfections are able to cause output and employment to fluctuate in cycles close to each other. The most notable of the early works developed in the wake of Keynes is Nicholas Kaldor’s 1956 paper on ‘alternative theories of distribution’, where he investigated the relation between profit, output, wages, and the saving rates out of wages, and out of profits.
