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Appears in Collections:Economics Book Chapters and Sections
Title: Risk and uncertainty
Author(s): Dow, Sheila
Editor(s): Dimand, Robert W
Hagemann, Harald
Citation: Dow S (2019) Risk and uncertainty. In: Dimand RW & Hagemann H (eds.) The Elgar Companion to John Maynard Keynes. Cheltenham: Edward Elgar, pp. 255-61.
Keywords: risk
liquidity preference
financial crisis
Issue Date: 2019
Date Deposited: 15-Nov-2020
Abstract: Uncertainty, as unquantifiable risk, was central to Keynes’s philosophy and economics, and continues to be relevant under modern conditions. For Keynes, knowledge is in general uncertain because of the organic nature of the subject matter; quantifiable risk is the special case. He developed a theory of how in practice we can still establish grounds for belief under uncertainty, drawing on weight of argument and multiple strands of reasoning, such that uncertainty is a matter of degree. The degree of uncertainty influences fundamentally the key variable in Keynes’s theory of effective demand: planned investment. Further, money plays a crucial role as the refuge from uncertainty, such that the rate of interest is a monetary rate. Applied to modern institutions and conditions, this theory is shown to explain the recent crisis.
Rights: Publisher policy allows this work to be made available in this repository. Published in The Elgar Companion to John Maynard Keynes (ed. by Robert W. Dimand and Harald Hagemann), copyright Edward Elgar Publishing. The original publication is available at: The only uses of this work permitted are private study or research.
DOI Link: 10.4337/9781788118569

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