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Andrews, David R wrote: 
> On p. 40 of the General Theory Keynes wrote: 
> 
> "To say that net output to-day is greater, but the price-level lower, 
> than ten years ago or one year ago, is a proposition of a similar 
> character to the statement that Queen Victoria was a better queen but not 
> a happier woman than Queen Elizabeth -- a proposition not without meaning 
> and not without interest, but unsuitable as material for the differential 
> calculus.  Our precision will be a mock precision if we try to use such 
> partly vague and non-quantitative concepts as the basis of a quantitative 
> analysis." 
> 
> Am I missing something, or is this a rejection of the concept of the price 
> level as a theoretically useful tool?  Isn't the price level still an 
> important concept in macrotheory?  Has Keynes been refuted or has this 
> view been seriously discussed in the Keynes literature? 
> 
> David Andrews 
> [log in to unmask] 
> 
 
There are enormous conceptual, empirical, and practical problems in 
constructing price and quantity indices. All these problems go away if 
we consider only very small changes (from year to year, say). But the 
moment you start comparing the price "level" today or the output "level" 
today to that of a century ago, index-number problems make it very hard 
to figure out what you should do (or even if there is anything you can 
do) to produce _the_ answer. 
 
Brad De Long 
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is long past the ocean is flat again." 
                          --J.M. Keynes 
 
 
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