Keynes Vs. Mankiw: Differences in Monetary Theory

Abstract

This paper discusses the main differences between monetary theory developed by John Maynard Keynes, in his General Theory of Employment, Interest, and Money, and Neoclassical Keynesianism, as outlined in Professor Gregory Mankiw´s textbook. For doing this, we analyze the structure of neoclassical Keynesianism, its assumptions and the monetary theory implicit in both the short and the long term, then we contrast this with the monetary ideas of Keynes. The central finding is that the contrast between those analytical trends leads to important differences in monetary policy, as well as to different perspectives on the stability of the market economies and the structural reforms thereof.