Re: Re: Re: AD?

[michael@xxxxxxxxxxxxxxxxx]

because prices are on the vertical axis.

>
> michael,
>      I get the message that most (if not all) are
> losing interest in this, so this will be my last on
> this.  But.....
>      Not clear to me why AS/AD implies some
> focus on prices as a policy variable, other than
> that they are in there.  Maybe there is more of a
> tilt there.  Keynesians were certainly criticized for
> ignoring inflation, although AS/AD allowed for a
> non-monetarist explanation of it.
>    I grant you that expectations are not in there.
> But, I do not see why AS/AD as such says government
> can do nothing.  In a world of upward-sloping AS curves,
> government can move AD out and thus raise real output
> and lower unemployment.   Again (and for the last time)
> it is the assumption of a vertical AS that gives that last
> conclusion, unless one pulls a Colander and declares the
> vertical AS curve to shift out with government AD policies.
>       Oh well, enough of that, except to note that probably
> the reason that Colander's JEP piece on this got so much
> mail is that it is not just radical economists who are frustrated
> but pretty much most economists with a brain in their heads.
> None of the textbook presentations are fully internally
> consistent and most of us know this.  I have cooked up my
> own version that makes sense to me, but that is what a lot
> of us have been having to do while hoping the students don't
> get too confused by our diverging from whatever text we have
> made them buy.
> Barkley Rosser
> http://cob.jmu.edu/rosserjb
> -----Original Message-----
> From: michael@xxxxxxxxxxxxxxxxx <michael@xxxxxxxxxxxxxxxxx>
> To: pen-l@xxxxxxxxxxxxxxxxxxx <pen-l@xxxxxxxxxxxxxxxxxxx>
> Date: Thursday, August 31, 2000 6:10 PM
> Subject: [PEN-L:1077] Re: AD?
>
>
> >It is anti-keynesian in the sense that it suggests that appropriate prices
> >can guide an economy.  It is anti-k. because it ignores the role of
> >expectations.  It is anti-k. because it is used to suggest that
> >intervention in the economy cannot do much good.
> > >
> >> michael,
> >>       OK, I grant that on pp. 300-303 of the GT, Keynes
> >> does not describe an AD curve in P-Q space, although
> >> he clearly describes an AS, curve, without calling it that.
> >>       So, perhaps a downward-sloping AD curve in P-Q
> >> space is "non-Keynesian" in that sense.  But, why is it
> >> "anti-Keynesian"?  After all, a downward-sloping AD
> >> curve allows for cost-push inflation theories, although
> >> one can get that with a vertical or upward-sloping AD
> >> if one has it shift backwards due to falling income with
> >> a backward-shifting AS curve.
> >> Barkley Rosser
> >>
> >>
> >
> >
> >--
> >Michael Perelman
> >Economics Department
> >California State University
> >Chico, CA 95929
> >
> >Tel. 530-898-5321
> >E-Mail michael@xxxxxxxxxxxxxxxxx
> >
> >
>
>


--
Michael Perelman
Economics Department
California State University
Chico, CA 95929

Tel. 530-898-5321
E-Mail michael@xxxxxxxxxxxxxxxxx