The nature of the ADAS model based on the ISLM model
AbstractThe aggregate demand and supply model (ADAS) is interpreted as a synthesis of the Keynesian and neoclassical models. It uses the ISLM model, without explaining its nature, to derive aggregate demand (AD). It is combined with an aggregate supply (AS) curve to explain price- inflation and output dynamics. This paper argues that neither the AD nor AS curve is conceptually the same as its microeconomic counterpart and ADAS is not a synthesis. In fact ADASimplies that discretionary policy is necessary and that price changes do not perform their traditional negative feedback function.
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Bibliographic InfoArticle provided by Oxford University Press in its journal Cambridge Journal of Economics.
Volume (Year): 31 (2007)
Issue (Month): 3 (May)
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Other versions of this item:
- B Bhaskara Rao, 2005. "The Nature of the ADAS Model Based on the ISLM Model," Macroeconomics 0510001, EconWPA.
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