The L-shaped aggregate supply curve and the future of macroeconomics
The idea of the 'L-shaped aggregate supply curve', supposedly a feature of primitive macroeconomic models, is in fact a reasonable reconstruction of a well developed way of thinking that specifically denied a relation between wage change and aggregate employment.� Neither that approach nor the idea of cost-push inflation to which it is related need be crude or superficial.� Although the ideas in question were swept away by the Phillips curve, they have much merit and their reintroduction to mainstream macroeconomics might pay large dividends.
|Date of creation:||01 May 2010|
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