Economics in Crisis: Severe and Logical Contradictions of Classical, Keynesian, and Popular Trade Models

Ravi Batra

Review of International Economics, 2002, vol. 10, issue 4, 623-644

Abstract: The paper examines three popular models that form the foundation of modern economics. The author concludes that two of the three, the classical and the Keynesian, are seriously deficient in logic, whereas the third, dealing with gains from trade, is partially lacking in logic. Classical and neo–Keynesian approaches require desired investment to expand during recessions, whereas the trade model requires real GDP to rise without any rise in employment, capital stock, or technology. The paper offers an alternative macro framework that is free from the limitations of conventional models. Money is either neutral or non–neutral, depending on whether the economy is operating below or at full capacity. Wages are strictly determined in the labor market, yet employment is influenced by aggregate demand. The alternative model thus combines the attractive features of classical and Keynesian frameworks.

Date: 2002
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://doi.org/10.1111/1467-9396.00354

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:reviec:v:10:y:2002:i:4:p:623-644

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0965-7576

Access Statistics for this article

Review of International Economics is currently edited by E. Kwan Choi

More articles in Review of International Economics from Wiley Blackwell
Bibliographic data for series maintained by Wiley Content Delivery ().