Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/203870 
Year of Publication: 
1995
Series/Report no.: 
wiiw Working Paper No. 5
Publisher: 
The Vienna Institute for International Economic Studies (wiiw), Vienna
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".
Subjects: 
Aggregate demand (AD)
aggregate supply (AS)
incompatibility of AD/AS
consistent AD/AS reformulations
profit maximization and multiplier analysis
disequilibrium theory and short side of the market
Document Type: 
Working Paper

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