Making sense of the aggregate demand-supply model

Making sense of the aggregate demand-supply model

Abstract: The central purpose of the paper is to highlight the logical inconsistency of the traditional Aggregate Demand-Aggregate Supply model, and to the so-called Keynesian comparative static results derived from it, which leads to inconsistent results when applied to out of equilibrium situations. The reason, the authors argue, is that in partial-equilibrium analysis households are distantly considered from firms, so that in aggregate demand-supply analysis such separation becomes untenable because firms are not only producers but providers of employment to households as well. The paper offers a further insight in the sequential dynamics of the General Theory, which lies behind this circularity of the income-expenditure flow and restates some of Kalecki’s and Keynes assertions after discussing two probable routes to solve this perceived inconsistency.

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Main Authors: Bhaduri,Amit, Laski,Kazimierz, Riese,Martin
Format: Digital revista
Language:English
Published: Universidad Nacional Autónoma de México, Facultad de Economía 2003
Online Access:http://www.scielo.org.mx/scielo.php?script=sci_arttext&pid=S0185-16672003000400051
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spelling oai:scielo:S0185-166720030004000512018-05-17Making sense of the aggregate demand-supply modelBhaduri,AmitLaski,KazimierzRiese,MartinAbstract: The central purpose of the paper is to highlight the logical inconsistency of the traditional Aggregate Demand-Aggregate Supply model, and to the so-called Keynesian comparative static results derived from it, which leads to inconsistent results when applied to out of equilibrium situations. The reason, the authors argue, is that in partial-equilibrium analysis households are distantly considered from firms, so that in aggregate demand-supply analysis such separation becomes untenable because firms are not only producers but providers of employment to households as well. The paper offers a further insight in the sequential dynamics of the General Theory, which lies behind this circularity of the income-expenditure flow and restates some of Kalecki’s and Keynes assertions after discussing two probable routes to solve this perceived inconsistency.info:eu-repo/semantics/openAccessUniversidad Nacional Autónoma de México, Facultad de EconomíaInvestigación económica v.63 n.243 20032003-03-01info:eu-repo/semantics/articletext/htmlhttp://www.scielo.org.mx/scielo.php?script=sci_arttext&pid=S0185-16672003000400051en
institution SCIELO
collection OJS
country México
countrycode MX
component Revista
access En linea
databasecode rev-scielo-mx
tag revista
region America del Norte
libraryname SciELO
language English
format Digital
author Bhaduri,Amit
Laski,Kazimierz
Riese,Martin
spellingShingle Bhaduri,Amit
Laski,Kazimierz
Riese,Martin
Making sense of the aggregate demand-supply model
author_facet Bhaduri,Amit
Laski,Kazimierz
Riese,Martin
author_sort Bhaduri,Amit
title Making sense of the aggregate demand-supply model
title_short Making sense of the aggregate demand-supply model
title_full Making sense of the aggregate demand-supply model
title_fullStr Making sense of the aggregate demand-supply model
title_full_unstemmed Making sense of the aggregate demand-supply model
title_sort making sense of the aggregate demand-supply model
description Abstract: The central purpose of the paper is to highlight the logical inconsistency of the traditional Aggregate Demand-Aggregate Supply model, and to the so-called Keynesian comparative static results derived from it, which leads to inconsistent results when applied to out of equilibrium situations. The reason, the authors argue, is that in partial-equilibrium analysis households are distantly considered from firms, so that in aggregate demand-supply analysis such separation becomes untenable because firms are not only producers but providers of employment to households as well. The paper offers a further insight in the sequential dynamics of the General Theory, which lies behind this circularity of the income-expenditure flow and restates some of Kalecki’s and Keynes assertions after discussing two probable routes to solve this perceived inconsistency.
publisher Universidad Nacional Autónoma de México, Facultad de Economía
publishDate 2003
url http://www.scielo.org.mx/scielo.php?script=sci_arttext&pid=S0185-16672003000400051
work_keys_str_mv AT bhaduriamit makingsenseoftheaggregatedemandsupplymodel
AT laskikazimierz makingsenseoftheaggregatedemandsupplymodel
AT riesemartin makingsenseoftheaggregatedemandsupplymodel
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