Re: US Trade Deficit As 'World Engine Of Growth'?

[Robert Williams <vic93@xxxxxxxxxxxx>]

Paul

> As I explain in my book FINANCIAL MARKETS, MONEY AND THE REAL WORLD,
Is this a quote?

> Keynes
> deflated all nominal values by the money wage unit in order to use Marshall's
> scissor analogue of supply and demand -- where demand is one blde of a scissor
> and supply is the other blade.  Marshall then noted thast if we keep one blade
> of the scissor constant (by construction) then we can say that the other blade
> did all the cutting.
I'm not clear on what you are saying here or its implications.  I am
aware that Marshal reversed the dependent asnd independent variables [I
find changing them back more useful] in order to develop his "Scissor"
analogy and Keyenes followed in his footsteps.  I've never learned why
he (Marshal) did this or why Keynes and everyone else followed suit and
still use the analogy to this day.

I also wonder at the validity of the "scissor" analogy as a fair
representation of "the economy as a whole" it may address to some degree
Keynes' concern for full employment [though I tend to think it doesn't]
but it can in no way that I can envisage his concern for the fair and
equitable distribution of the output of the economy.

> By deflating by the money wage unit, Keynes, by construction, kept his
> aggregate suuply blade fixed (i.e., changes in the money wage would not change
> the position of shape of the aggregate supply function).  Consequently if
> because of some schock initially the point of effective demand (i.e., the
> intersection of the aggregate supply and aggregate demand functions both
> deflated by the wage unit), then one can demonstrate that ONLY an increase in
> aggregate demand (in wage unit terms) can increase employment. In other words,
> flexible wages WILL NOT automatically return the economy to full employment --
> unless one can demonstrate that changes in the wage rate INCREASES the
> aggregate demande function (measured in wage units).
I have a number of thoughts on this matter. 1)  it may not be AG that
needs managing at all if higher levels  of employment are the target.
2) the use of the DD-SS analogy (scissors) returns a solution that is a
point of intersection [the result of the reversal of the dependent and
independent variables]  when a broader vista is needed [ that would
return a solution of areas under the curve.]

But what I really need is statistics online RE:  inflation and interest
rates on the Canadian Economy from 1925 to the present.  Trying to prove
the above thesis.

Bob Williams

> Paul
>
> Paul Davidson
> Editor, Journal of Post Keynesian Economics
> University of Tennessee
> SMC 503
> Knoxville, Tennessee 37996-0550
> office phone #;(865)974-4221; office fax# (865)974-1686 or (865)974-4601
> home phone and fax # (865)692-0802
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> http://econ.bus.utk.edu/davidsonextra/Davidson.html