Aggregate demand and supply

Aggregate demand and supply

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 an...

Criticisms of Aggregate Demand and Aggregate Supply :

The Aggregate Demand – Aggregate Supply framework has dominated intermediate macroeconomics textbooks since the 1980s. However, there have been 2007). In spite of these criticisms, the ADAS framework had continued to dominate the textbooks, with little or no response to these criticisms. This paper reviews the main criticisms of the ADAS framework, and then focuses on Gregory Mankiw's presentat...

A Dynamic Model of Aggregate Demand and Aggregate Supply

The Dynamic Effects of Aggregate Demand and Supply Disturbances

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The Dynamic Effects of Aggregate Demand and Supply Disturbance

We decompose the behavior of GNP and unemployment into the dynamic effects of two types of shocks: shocks that have a permanent effect on output and shocks that do not. We interpret the £rst as supply shocks, the second as demand shocks. We £nd that demand disturbances have a bump shaped effect on both output and unemployment; the effect peaks after a year and vanishes after two to three years....