The necessary condition for stability in Tobin's Walras-Keynes-Phillips model: A note
In a 1975 paper entitled 'Keynesian Models of Recession and Depression' James Tobin sought to formalize in a dynamic model Keynes' argument that unemployment could persist in an economy with flexible wages and prices. In the course of his analysis Tobin presented, without proof, a 'critical necessary condition for stability' of the full employment equilibrium which is violated when expenditure is sufficiently responsive to the expected inflation rate. This note contends that later attempts in the literature to prove that Tobin's condition is necessary for stability have been unsuccessful and provides a valid proof of the same result. The note also demonstrates the existence of a sufficient condition for instability of equilibrium which is weaker than the negation of Tobin's condition.
Volume (Year): 31 (2011)
Issue (Month): 1 ()
|Contact details of provider:|| |
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Robert W. Dimand, 2005. "Dimand on the Corridor of Stability," American Journal of Economics and Sociology, Wiley Blackwell, vol. 64(1), pages 185-199, 01.
- Palley, Thomas I., 2008. "Keynesian models of deflation and depression revisited," Journal of Economic Behavior & Organization, Elsevier, vol. 68(1), pages 167-177, October.
- McDonald, Ian M, 1980. "On the Comparison of the Stability Implications of Marshallian and Walrasian Adjustment Schemes: Note," American Economic Review, American Economic Association, vol. 70(4), pages 829-33, September.
When requesting a correction, please mention this item's handle: RePEc:ebl:ecbull:eb-10-00688. 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: (John P. Conley)
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.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with 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 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.