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Making Sense of the Aggregate Demand-Supply Model

Author

Listed:
  • Amit Bhaduri
  • Kazimierz Laski
  • M. Riese

Abstract

This paper questions the validity of using the aggregate demand (AD) and aggregate supply (AS) framework for analysing macroeconomic issues. AD derived from the Keynesian income-expenditure approach cannot be reconciled logically with AS derived from the profit maximization postulate in out-of-equilibrium positions. The paper shows two routes to achieving consistency, either by taking recourse to Kalecki's work or by entirely reformulating the analysis along neo-classical lines. Using these two polar cases, it reinterprets the model underlying Keynes' General Theory and modern disequilibrium analysis based on "rationing".

Suggested Citation

  • Amit Bhaduri & Kazimierz Laski & M. Riese, 1995. "Making Sense of the Aggregate Demand-Supply Model," wiiw Working Papers 5, The Vienna Institute for International Economic Studies, wiiw.
    • Handle: RePEc:wii:wpaper:5
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    File URL: https://wiiw.ac.at/making-sense-of-the-aggregate-demand-supply-model-dlp-4558.pdf
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    Cited by:

    1. Bhaduri, Amit, 1996. "Dynamic patterns in transformation," Structural Change and Economic Dynamics, Elsevier, vol. 7(3), pages 281-297, September.
    2. Martin Riese, 2016. "Kazimierz Laski (1921-2015): ein engagierter Kaleckianer," Wirtschaft und Gesellschaft - WuG, Kammer für Arbeiter und Angestellte für Wien, Abteilung Wirtschaftswissenschaft und Statistik, vol. 42(1), pages 119-129.

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