On an Alleged Inconsistency in Aggregate-Supply/Aggregate-Demand Analysis
AbstractIt has been argued that aggregate-supply/aggregate-demand (AS/AD) models suffer from an inconsistency because they assume that firms set price and adjust quantity for the AD curve and are profit-maximizing price takers for the AS curve. It is shown that this inconsistency is rife in intermediate macroeconomic texts. However, it is argued that the problem can be solved by appropriately reinterpreting the AD curve and the dynamics of the model. Thus while there is no need to jettison the AS/AD model as a teaching tool on grounds of internal inconsistency, there is a need to interpret it carefully.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by Eastern Economic Association in its journal Eastern Economic Journal.
Volume (Year): 23 (1997)
Issue (Month): 4 (Fall)
Contact details of provider:
Postal: c/o Dr. Alexandre Olbrecht, The Anisfield School of Business 205, Ramapo College, 505 Ramapo Valley Road, Ramapo, New Jersey 07430, USA
Phone: (201) 684-7346
Web page: http://www.ramapo.edu/eea/journal.html
More information through EDIRC
AS AD; Macroeconomics; Supply;
Find related papers by JEL classification:
- E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Charles, Sébastien & Lang, Dany & Asensio, Angel, 2010.
"Post-Keynesian modelling: where are we, and where are we going to?,"
30726, University Library of Munich, Germany.
- Angel Asensio & Dany Lang & Sbastien Charles, 2012. "Post Keynesian modeling: where are we, and where are we going to?," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 34(3), pages 393-412, April.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Victor Matheson, College of the Holy Cross).
If references are entirely missing, you can add them using this form.