2012년 1월 7일 토요일

Some readings in Keynsian cross or multiplier model

자료 1: Mr. Keynes and the "Classics" Again: An Alternative Interpretation (David Colander, Middlebury College )

(...) Despite the  multitude of interpretations of Keynesian macroeconomics, only three have become part of the core of macroeconomics: Samuelson's Keynesian Cross, Hicks' IS/LM model, and a generic aggregate supply-demand model.  Any interpretation which cannot be captured in one of these models is not part of the core macro. 

(...) The hypothesis of this paper is  that that standard AS/AD model of the aggregate economy embodies a fundamentally incorrect view of the nature of Keynesian economics, and about the way the macroeconomy operates. That hypothesis is one that I believe is shared by many macroeconomic specialists. My contribution in this paper is to provide an equally simple, yet richer, AS/AD model of the macroeconomy which yields an interpretation of Keynesian economics which is more consistent with recent developments and which better focuses on the differences between the Keynesian and classical views of equilibrium of the aggregate economy. As will become clear below, explaining this alternative model exposes an inconsistency between the AS/AD model, as currently interpreted, and the Keynesian Cross model.  One or the other is correct, but not both. My alternative eliminates that inconsistency.  

My alternative AS/AD model is close to the current model, but it embodies some fundamentally different interpretations and assumptions about the way the aggregate economy works. The most important of these are the reinterpretation of the aggregate demand curve, making the definition of the curve one which is independent of supply, and the addition of an explicit psychological or expectational element to supply or production which captures an aggregate interdependence between supply and  demand decisions in the aggregate and which causes allows the supply curve to shift in response to expectations in demand.  These two additions are what makes my analysis consistent with the Keynesian Cross and with many of the modern New Keynesian interpretations.


Specifically, my alternative model gives one a fundamentally different view of: (1) the nature of short-run equilibrium and the disequilibrium adjustment process that accompanies it; (2) the stability of the aggregate supply curve and the interrelationship between aggregate supply and demand; and (3) the role of wage flexibility in causing unemployment.


THE STANDARD AS/AD EXPOSITION

The standard AS/AD model is presented in Figure 1.  The price level is on the vertical axis; total output is on the horizontal axis.

(...)

The Aggregate Demand Curve

The AD curve in the standard model is derived from the IS/LM model. To arrive at it one  goes through a thought experiment, asking what the real income equilibrium would be at various price levels. The resulting set of equilibria are plotted in price quantity space and called an AD curve.

This proceedure is not wrong, but it is problematic.  To call this set of points an aggregate demand curve assumes that the IS/LM model only determines the level of aggregate demand--not the level of aggregate equilibrium income.  But the IS/LM model is a model of equilibrium income, not of aggregate demand. In the IS/LM model effective demand determines the equilibrium output in the economy and is determined by an assumed interatction between aggregate supply and demand which works its way through a multiplier process.  Calling the curve derived from this thought experiment an AD curve, not an aggregate equilibrium curve, is inconsistent with the standard definition of the IS curve as representing goods market equilibria.

The inconsistency could, of course, simply be a problem of labelling which could be solved by not calling it an AD curve but by calling it an Aggregate Equilibrium curve; it is a curve that captures the various equilibria of the economy at various price levels.  Many Keynesians I have spoken with, when pressed on this issue, have said that they have always interpreted it as an Aggregate Equilibrium curve. Unfortunately, the problem is more severe than a simple labeling problem.  This can be seen by asking the questions: If the AD curve is actually an Aggregate Equilibrium curve, what is the role of the AS curve?  Isn't equilibrium determined by both aggregate supply and aggregate demand?  To add an AS curve to an Aggregate Equilibrium curve and to use both to determine an equilibrium is a contradiction. Since an AS curve can't be combined with an aggregate equilibrium interpretation of the AD curve, let us now turn to the AS curve in the standard presentation.

(...)


자료 2: The coming of Keynesianism to America: conversations with the founders of Keynesian economics


댓글 쓰기