Abstract
In this chapter we present two simple macroeconomic models that serve as an introduction to the KMG-Tobin model introduced in the next chapter. The first model, labelled DAS-AD, is a ‘disequilibrium’ extension of the AS-AD growth model of Sargent (1987, ch.5) that exhibits gradually adjusting wages and prices through a pair of modified Phillips curves. The second model introduces portfolio equations in a simple dynamic multiplier model inspired by Blanchard (1981).
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© 2011 Toichiro Asada, Peter Flaschel, Tarik Mouakil and Christian Proaño
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Asada, T., Flaschel, P., Mouakil, T., Proaño, C. (2011). Advances in AS-AD Model Building: Real Disequilibria and Portfolio Choice. In: Asset Markets, Portfolio Choice and Macroeconomic Activity. Palgrave Macmillan, London. https://doi.org/10.1057/9780230307773_2
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DOI: https://doi.org/10.1057/9780230307773_2
Publisher Name: Palgrave Macmillan, London
Print ISBN: 978-1-349-33133-8
Online ISBN: 978-0-230-30777-3
eBook Packages: Palgrave Economics & Finance CollectionEconomics and Finance (R0)