What Was Lost with IS-LM
The dominance of the IS-LM model in macroeconomics after 1937 led to the neglect and sometimes the outright loss of a number of important issues that had earlier been prominent in the literature. All these losses were related to the fact that economic life takes place over time, from which the IS-LM model's formal comparative static nature abstracted. Ideas about explicit dynamic modelling, inter-temporal choice and expectations, the analysis of policy issues in terms of regimes, and coordination failures in the inter-temporal allocation of resources, are discussed from this standpoint. The extent and importance of the losses are discussed, as are questions about how the intellectual dominance of IS-LM affected the forms in which some of these ideas have subsequently re-emerged.
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Volume (Year): 36 (2004)
Issue (Month): 5 (Supplement)
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- Laidler,David, 1999.
"Fabricating the Keynesian Revolution,"
Cambridge University Press, number 9780521641739.
- Michael D. Bordo & Anna J. Schwartz, 2004.
"IS-LM and Monetarism,"
History of Political Economy,
Duke University Press, vol. 36(5), pages 217-239, Supplemen.
- Edward Nelson, 2003.
"Money and the transmission mechanism in the optimizing IS-LM specification,"
2003-019, Federal Reserve Bank of St. Louis.
- Edward Nelson, 2004. "Money and the Transmission Mechanism in the Optimizing IS-LM Specification," History of Political Economy, Duke University Press, vol. 36(5), pages 271-304, Supplemen.
- Nelson, Edward, 2003. "Money and the Transmission Mechanism in the Optimizing IS-LM Specification," CEPR Discussion Papers 3898, C.E.P.R. Discussion Papers.
- Backhouse, Roger E, 1998. "If Mathematics Is Informal, Then Perhaps We Should Accept That Economics Must Be Informal Too," Economic Journal, Royal Economic Society, vol. 108(451), pages 1848-58, November.
- Robert W. Dimand, 2004. "James Tobin and the Transformation of the IS-LM Model," History of Political Economy, Duke University Press, vol. 36(5), pages 165-189, Supplemen.
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