chapter  26
9 Pages

THE CHANGING SIGNIFICANCE OF INFLATION

ByBrian Reddaway

It is noteworthy that the title of Keynes’s magnum opus (The General Theory of Employment, Interest and Money) includes no reference to prices at all. In a sense this is highly paradoxical. One may well say that the level of (real) output-implicitly represented in the title by ‘employment’—is more important than changes in prices, which are ‘only a paper affair’: but any general macroeconomic analysis can only hope to ‘make sense’ if it includes prices as one of the variables, even if the investigator is not much interested in what happens to them (at least in comparison with what happens to output, which directly affects welfare).