Keynesian Theory and AS/AD Analysis

Thomas Palley

Eastern Economic Journal, 1997, vol. 23, issue 4, 459-468

Abstract: This paper uses the AS/AD framework to illustrate competing approaches to (i) the dynamics of short run price-output adjustment, and (ii) the employment effects of nominal wage reductions. Nominal wages affect equilibrium outcomes if AD is subject to Pigou or Fisher debt effects. The Kaleckian model represents a variation on the neo-Keynesian model. Its principal contribution concerns the AD effects of the functional distribution of income, which introduces the mark-up as an important independent variable and focuses attention on capital-labor conflict.

Keywords: AS AD; Neo Keynesian (search for similar items in EconPapers)
JEL-codes: E12 E20 (search for similar items in EconPapers)
Date: 1997
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eej:eeconj:v:23:y:1997:i:4:p:459-468

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