Walras' law and the IS-LM model. A tale of progress and regress.

Publikation: Working/Discussion PaperWU Working Paper

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Abstract

This paper deals with the integration of Walras' law into Keynesian macroeconomics and the attempts at a consistent specification of period models (beginning- vs. end-of-period-equilibrium). Three examples are examined where neglect of a consistent specification led to erroneous results: (1) the identification of the IS-condition with equilibrium of the "flow market" for bonds, (2) superficial treatments of the liquidity trap, and (3) the assumptions on the stochastic structure of monetary and real shocks in determining the optimal monetary instrument. (author's abstract)
OriginalspracheEnglisch
ErscheinungsortVienna
HerausgeberInst. für Volkswirtschaftstheorie und -politik, WU Vienna University of Economics and Business
PublikationsstatusVeröffentlicht - 2000

Publikationsreihe

NameDepartment of Economics Working Paper Series
Nr.69

WU Working Paper Reihe

  • Department of Economics Working Paper Series

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