The Nature of the ADAS Model Based on the ISLM Model

B. Bhaskara Rao ()

Macroeconomics from EconWPA

Abstract: The aggregate demand and supply model (ADAS) is interpreted as a synthesis of the Keynesian and neoclassical models. It uses the ISLM model, without explaining its nature, to derive aggregate demand (AD). It is combined with an aggregate supply (AS) curve to explain price- inflation and output dynamics. This paper argues that neither the AD nor AS curve is conceptually the same as its microeconomic counterpart and ADAS is not a synthesis. In fact ADASimplies that discretionary policy is necessary and that price changes do not perform their traditional negative feedback function.

Keywords: eynesian and neo classical models; aggregate demand and supply; monetary policy rule; price adjustments; stabilization policy (search for similar items in EconPapers)
JEL-codes: E (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-hpe and nep-mac
Date: 2005-10-01
Note: Type of Document - pdf; pages: 15. Argues that the textbook ADAS model is in need of attention.
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Related works:
Journal Article: The nature of the ADAS model based on the ISLM model (2007)
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Persistent link: http://EconPapers.repec.org/RePEc:wpa:wuwpma:0510001

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