There is a considerable tension in neo-Keynesian macroeconomics as to whether the familiar IS-LM analysis should be interpreted as a description of equilibrium or disequilibrium. The present paper shows how the IS-LM model can be used for either purpose. The first section provides the preliminaries for the model of disequilibrium behavior that I will use. The second section lays out the sectoral notional and effective demands. The third section gives the equilibrium solution while the fourth and fifth sections give excess supply and excess demand solutions respectively.
Download Info
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. In case of further problems read
the IDEAS help
file. Note that these files are not on the IDEAS
site. Please be patient as the files may be large.