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The Use and Abuse of Aggregate Demand and Supply Functions


  • Nevile, J W
  • Rao, B Bhaskara


Aggregate demand and supply analysis is the basic paradigm presented to students in virtually all modern textbooks. It tends to come in two versions that may be loosely labeled as neoclassical and neo-Keynesian. The paper argues that, in both cases, the function called an aggregate supply curve is actually the equation giving the conditions for labor-market equilibrium. In both cases, but for different reasons, the analysis is unsatisfactory, involving the use of contradictory assumptions or inconsistent modes of thought. Copyright 1996 by Blackwell Publishers Ltd and The Victoria University of Manchester

Suggested Citation

  • Nevile, J W & Rao, B Bhaskara, 1996. "The Use and Abuse of Aggregate Demand and Supply Functions," The Manchester School of Economic & Social Studies, University of Manchester, vol. 64(2), pages 189-207, June.
  • Handle: RePEc:bla:manch2:v:64:y:1996:i:2:p:189-207

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    References listed on IDEAS

    1. Robertson, D & Symons, J, 1994. "Five Weeks in the Life of the Pound. Interest Rates, Expectations and Sterling's Exit from the ERM," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 56(1), pages 1-12, February.
    2. Levin, Eric J & Copeland, Laurence S, 1993. "Reading the Message from the U.K. Indexed Bond Market: Real Interest Rates, Expected Inflation and the Risk Premium," The Manchester School of Economic & Social Studies, University of Manchester, vol. 61(0), pages 13-34, Suppl..
    3. Woodward, G Thomas, 1990. "The Real Thing: A Dynamic Profile of the Term Structure of Real Interest Rates and Inflation Expectations in the United Kingdom, 1982-89," The Journal of Business, University of Chicago Press, vol. 63(3), pages 373-398, July.
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    Cited by:

    1. Grieve, Roy H, 2014. "'Right Back Where We Started From': From 'The Classics' To Keynes, And Back Again," SIRE Discussion Papers 2014-001, Scottish Institute for Research in Economics (SIRE).
    2. Max Gillman, 2002. "Keynes's Treatise : aggregate price theory for modern analysis?," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 9(3), pages 430-451.
    3. Rao, B. Bhaskara, 1993. "The nature of transactions in the U.S. aggregate goods market," Economics Letters, Elsevier, vol. 41(4), pages 385-390.

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