Editing Pigou effect (section)

== History ==
The Pigou effect was first popularised by Arthur Cecil Pigou in 1943, in ''The Classical Stationary State'' an article in the ''[[Economic Journal]]''.<ref name=Pigou43>{{cite journal |last=Pigou  |first=Arthur Cecil |author-link=Arthur Cecil Pigou |year=1943 |title=The Classical Stationary State |journal=Economic Journal |volume=53 |issue=212 |pages=343–351 |jstor= 2226394 |doi=10.2307/2226394}}</ref> He had proposed the link from balances to consumption earlier, and [[Gottfried Haberler]] had made a similar objection the year after the ''General Theory'''s publication.<ref>{{Cite web |url=http://cepa.newschool.edu/het/essays/keynes/realbalances.htm |title=Real Balances Debate |access-date=2005-05-12 |archive-url=https://web.archive.org/web/20050624075216/http://cepa.newschool.edu/het/essays/keynes/realbalances.htm |archive-date=2005-06-24 |url-status=dead }}</ref>

Following the tradition of [[classical economics]], Pigou favoured the idea of "natural rates" to which the economy would return in most cases, although he acknowledged that [[Sticky Prices|sticky prices]] might still prevent reversion to natural output levels after a [[demand shock]]. Pigou saw the "Real Balance" effect as a mechanism to fuse Keynesian and classical models.