  A standard growth model is modified in a straightforward way to incorporate
what Keynes (1936) suggests in the "essence" of his general theory. The
theoretical essence is the idea that exogenous changes in investment cause
changes in employment and unemployment. We implement this idea by assuming the
path for capital growth rate is exogenous in the growth model. The result is a
growth model that can explain both long term trends and fluctuations around the
trend. The modified growth model was tested using the U.S. economic data from
1947 to 2014. The hypothesized inverse relationship between the capital growth
and changes in unemployment was confirmed, and the structurally estimated model
fits fluctuations in unemployment reasonably well.
