ABSTRACT
In Hicks’ account the specificity of the Keynesian model hinges on the liquidity trap argument. No difference between the Keynesian and the classical model would remain were this argument proven to be weak or flawed. Now, this is precisely what happened with the emergence of the ‘real-balance effect’, put forward by Pigou (1943).1 Eventually, the only bequest from the Keynesian revolution was a rudimentary pragmatic general equilibrium model, the IS-LM apparatus, devoid of any specific Keynesian trait. Clearly, Keynesians were in need of finding a new way of contrasting the Keynesian and the classical models.
