Making Sense of the Aggregate Demand-Supply Model

By: Bhaduri, Amit.

Contributor(s): Laski, Kazimierz | Riese, M.

Material type: materialTypeLabel

BookSeries: wiiw Working Papers: 5Publisher: Wien : Wiener Institut für Internationale Wirtschaftsvergleiche (wiiw), 1995Description: 16 S., 4 Figures, 30cm.Subject(s): Aggregate demand (AD) | aggregate supply (AS) | incompatibility of AD/AS | consistent AD/AS reformulations | profit maximization and multiplier analysis | disequilibrium theory and short side of the marketOnline resources: Click here to access online Summary: This paper questions the validity of using the aggregate demand (AD) and aggregate supply (AS) framework for analysing macroeconomic issues. AD derived from the Keynesian income-expenditure approach cannot be reconciled logically with AS derived from the profit maximization postulate in out-of-equilibrium positions. The paper shows two routes to achieving consistency, either by taking recourse to Kalecki's work or by entirely reformulating the analysis along neo-classical lines. Using these two polar cases, it reinterprets the model underlying Keynes' General Theory and modern disequilibrium analysis based on "rationing".

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Item type	Current library	Call number	Status	Date due	Barcode
Paper	WIIW Library	5.700/5 (Browse shelf(Opens below))	Available		1000010004558

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This paper questions the validity of using the aggregate demand (AD) and aggregate supply (AS) framework for analysing macroeconomic issues. AD derived from the Keynesian income-expenditure approach cannot be reconciled logically with AS derived from the profit maximization postulate in out-of-equilibrium positions. The paper shows two routes to achieving consistency, either by taking recourse to Kalecki's work or by entirely reformulating the analysis along neo-classical lines. Using these two polar cases, it reinterprets the model underlying Keynes' General Theory and modern disequilibrium analysis based on "rationing".

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