THE TEXT BOOK BLACK MAGIC or how to make the Keynes theory disappear

Roy Grieve ()

No 911, Working Papers from University of Strathclyde Business School, Department of Economics

Abstract: This paper looks into the question of how it can come about that, not uncommonly, contemporary macro textbooks start their exposition in Keynesian fashion, but end up presenting an essentially classical account. Using a typical textbook for illustration, our diagnosis is that when the AD/AS model is introduced into the discussion, then things go wrong. The AS analysis rehabilitates a pre-Keynesian conception of the working of the labour market, while uncritical and ill-informed use of the AD function effectively ‘tames’ aggregate demand by making it manipulable in such a way as to accord with conditions of labour supply. Not surprisingly, Keynes’s vision of the functioning of the macro system gets lost along the way.

Keywords: AD/AS Model; Labour Market - Keynesian and Classical Models (search for similar items in EconPapers)
JEL-codes: A22 A23 B22 E12 E13 (search for similar items in EconPapers)
Pages: 47 pages
Date: 2009-04
New Economics Papers: this item is included in nep-hpe and nep-pke
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Persistent link: https://EconPapers.repec.org/RePEc:str:wpaper:0911

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