EconPapers    
Economics at your fingertips  
 

Aggregate demand, sunk costs and discontinuous adjustments in an amended new consensus model

Federico Bassi ()

Review of Political Economy, 2016, vol. 28, issue 3, 313-335

Abstract: In standard new consensus macroeconomics models, the impact of shocks disappears until the economy reaches a time-independent steady-state equilibrium. Introducing sunk costs and capital indivisibilities in capacity adjustment decisions implies the rejection of asymptotic stability and a reconsideration of the relevance and usefulness of traditional steady-state analysis based on a fixed and exogenous ‘center of gravity’. Moreover, effective demand and Keynesian discretionary policies regain a central role in economic policy by determining the transient equilibriums that emerge endogenously.

Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://hdl.handle.net/10.1080/09538259.2016.1199397 (text/html)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Aggregate demand, sunk costs and discontinuous adjustments in an amended new consensus model (2016)
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:taf:revpoe:v:28:y:2016:i:3:p:313-335

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/CRPE20

DOI: 10.1080/09538259.2016.1199397

Access Statistics for this article

Review of Political Economy is currently edited by Steve Pressman and Louis-Philippe Rochon

More articles in Review of Political Economy from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().

 
Page updated 2022-05-08
Handle: RePEc:taf:revpoe:v:28:y:2016:i:3:p:313-335