Abstract
The previous chapters set out the basic elements of the neoclassical macroeconomic model. In this chapter, the equilibrium solutions to the simplest version of the model will be treated in detail. The purpose is not merely to reproduce what can be found in standard textbooks on macroeconomics. The intention of this and the next two chapters is to substantiate a previous assertion.
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Note and References
See, for example, Gardner Ackley, Macroeconomic Theory (New York, Macmillan, 1961) ch. vi; and Shapiro (1974) ch. 17. The inconsistency goes unmentioned in more recent textbooks as well, as shown in the treatment of inflation.
The other two exceptions are rigid money wages, considered above, and the ‘liquidity trap’, considered in Section 6.3. Leijonhufvud has argued that neither of these two can be found in The General Theory (Axel Leijonhufvud, Information and Coordination: Essays in Macroeconomic Theory (New York: Oxford University Press, 1981 pp. 53–4)).
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© 1989 John Weeks
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Weeks, J. (1989). The Classical False Dichotomy Model. In: A Critique of Neoclassical Macroeconomics. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-20296-6_5
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DOI: https://doi.org/10.1007/978-1-349-20296-6_5
Publisher Name: Palgrave Macmillan, London
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