The nature of the ADAS model based on the ISLM model
The aggregate demand and supply model (ADAS) is interpreted as a synthesis of the Keynesian and neoclassical models. It uses the ISLM model, without explaining its nature, to derive aggregate demand (AD). It is combined with an aggregate supply (AS) curve to explain price- inflation and output dynamics. This paper argues that neither the AD nor AS curve is conceptually the same as its microeconomic counterpart and ADAS is not a synthesis. In fact ADASimplies that discretionary policy is necessary and that price changes do not perform their traditional negative feedback function.
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Volume (Year): 31 (2007)
Issue (Month): 3 (May)
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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.:
- Felderer, Bernhard & Homburg, Stefan, 2005. "Makroökonomik und neue Makroökonomik," EconStor Books, ZBW - German National Library of Economics, number 92556.
- Frank Hahn, 1978. "On Non-Walrasian Equilibria," Review of Economic Studies, Oxford University Press, vol. 45(1), pages 1-17.
- Rao, B Bhaskara, 1986. "Alternative Aggregate Demand Functions in Macroeconomics," Australian Economic Papers, Wiley Blackwell, vol. 25(47), pages 261-264, December.
- Benassy, Jean-Pascal, 1990.
"Non-Walrasian equilibria, money, and macroeconomics,"
Handbook of Monetary Economics,
in: B. M. Friedman & F. H. Hahn (ed.), Handbook of Monetary Economics, edition 1, volume 1, chapter 4, pages 103-169
- William Poole, 1970. "Optimal Choice of Monetary Policy Instruments in a Simple Stochastic Macro Model," The Quarterly Journal of Economics, Oxford University Press, vol. 84(2), pages 197-216.
- David H. Romer, 2000.
"Keynesian Macroeconomics without the LM Curve,"
Journal of Economic Perspectives,
American Economic Association, vol. 14(2), pages 149-169, Spring.
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