Keynesians, like Keynes, treat all cyclical unemployment as “involuntary,” a loss of output to society and, if not compensated, a loss of income to the individuals who are unemployed. This reasoning ignores the distinction between income and current receipts basic to the model of time preference that economists use. Monetarists, like mainstream classical economists, distinguish between current receipts and income and regard much of the unemployment observed during mild cycles as a consequence of fluctuations in receipts. Cyclical unemployment alters permanent or anticipated income streams and consumption only if fluctuations in receipts cause a reevaluation of the mean level or variability of earnings from particular occupations and in the aggregate.
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