Aggregate demand and supply
نویسنده
چکیده
This paper is part of a broader project that provides a microfoundation to the General Theory of J. M. Keynes. I call this project “old Keynesian economics” to distinguish it from new-Keynesian economics, a theory that is based on the idea that to make sense of Keynes we must assume that prices are sticky. I describe a multi-good model in which I interpret the definitions of aggregate demand and supply found in the General Theory through the lens of a search theory of the labor market. I argue that Keynes’ aggregate supply curve can be interpreted as the aggregate of a set of first-order conditions for the optimal choice of labor and, using this interpretation, I reintroduce a diagram that was central to the textbook teaching of Keynesian economics in the immediate post-war period.
منابع مشابه
The Co-movement between Output and Prices: Evidence from Iran
This paper employs a multivariate dynamic conditional correlation GARCH model, which is developed by Engle (2001, 2002), to detect the timing and nature of changes in the comovement between Iranian output and prices for the periods after Iran–Iraq war , known as imposed war . The results showed that there is a weak correlation between output and prices after imposed war and varies periodically...
متن کاملUsing the Aggregate Demand-Aggregate Supply Model to Identify Structural Demand-Side and Supply-Side Shocks: Results Using a Bivariate VAR
This paper uses the short-run restrictions implied by a simple aggregate demandaggregate supply model as an aid in identifying structural shocks. Combined with the Blanchard-Quah restriction, it allows estimation of the slope of the aggregate supply curve, the variances of structural demand and supply shocks, and the extent to which structural demand and supply shocks are correlated. This paper...
متن کاملCartelized Oil Market with Alternative Energy Supply
This paper presents an oil price cartel model. The aggregate reaction functions for non-cartel producers and for substitute suppliers are included. The former group acts as a price-taker, while the latter expects oil prices in production of its non-oil energy resources. This expectation about prices affects a cartel’s oil demand and, thus, gives intertemporal price elasticities It turns out tha...
متن کاملAggregate Demand and Aggregate Supply in Germany and the United Kingdom
The article uses a structural vector autoregressive (SVAR) model under some well agreed-on long-run neutrality assumption to identify the aggregate demand (AD) and aggregate supply curve (AS) in West Germany and the UK. The empirical results indicate similarities and contrasts in macroeconomic behaviour across both countries. A main result is that the UK is characterized by much larger output a...
متن کاملTwo Stage Multiple Attribute Decision Making Problem in Iranian Gas Distribution Systems
The purpose of this paper is to present the possibility of replacing physical unit cost in transportation or distribution problems by an aggregate coefficient, getting qualitative and subjective considerations involved. The model for constructing aggregate cost is a two stage multiple attribute decision-making problems. In the first stage supply points, demand points and routes of transportatio...
متن کاملNber Working Paper Series a Theory of Aggregate Supply and Aggregate Demand as Functions of Market Tightness with Prices as Parameters
This paper presents a parsimonious equilibrium business cycle model with trade frictions in the product and labor markets. The model features unemployment and unsold production and its general equilibrium can be represented very simply: as the intersection of an aggregate supply and an aggregate demand, with product market tightness acting as a price. The aggregate supply represents the expecte...
متن کامل