Comment: The nature of the ADAS model based on the ISLM model

Derick Boyd

Cambridge Journal of Economics, 2010, vol. 34, issue 3, 587-590

Abstract: Rao suggests that the Rowan demand curve does not exist but that result is obtained through treating the system as a simultaneous equation problem that will inevitably obtain the standard aggregate demand (AD) result. The Rowan procedure is a conditional function that makes planned AD conditional on planned aggregate supply (AS)--a quintessential Keynesian process. This results in an AS-dependent AD curve that is upward sloping. This system can be shown to be stable, have a firm connection to measures of national income accounting without dependence on notions of equilibrium and implications for econometric estimations. Copyright The Author 2009. Published by Oxford University Press on behalf of the Cambridge Political Economy Society. All rights reserved., Oxford University Press.

Date: 2010
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