IDEAS home Printed from
   My bibliography  Save this article

Economics in Crisis: Severe and Logical Contradictions of Classical, Keynesian, and Popular Trade Models


  • Batra, Ravi


The paper examines three popular models that form the foundation of modern economics. The author concludes that two of the three, the classical and the Keynesian, are seriously deficient in logic, whereas the third, dealing with gains from trade, is partially lacking in logic. Classical and neo-Keynesian approaches require desired investment to expand during recessions, whereas the trade model requires real GDP to rise without any rise in employment, capital stock, or technology. The paper offers an alternative macro framework that is free from the limitations of conventional models. Money is either neutral or non-neutral, depending on whether the economy is operating below or at full capacity. Wages are strictly determined in the labor market, yet employment is influenced by aggregate demand. The alternative model thus combines the attractive features of classical and Keynesian frameworks. Copyright 2002 by Blackwell Publishing Ltd.

Suggested Citation

  • Batra, Ravi, 2002. "Economics in Crisis: Severe and Logical Contradictions of Classical, Keynesian, and Popular Trade Models," Review of International Economics, Wiley Blackwell, vol. 10(4), pages 623-644, November.
  • Handle: RePEc:bla:reviec:v:10:y:2002:i:4:p:623-44

    Download full text from publisher

    File URL:
    File Function: link to full text
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to search for a different version of it.


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Raicu Gabriel & Stanca Costel & Raicu Alexandra, 2012. "Business cycles and economic distortions," Constanta Maritime University Annals, Constanta Maritime University, vol. 17(1), pages 295-298.

    More about this item


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:reviec:v:10:y:2002:i:4:p:623-44. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing) or (Christopher F. Baum). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.