Abstract
In previous chapters the focus has been on the neoclassical theory of employment. We began with a barter (‘real’) system, demonstrating that full employment is achieved in such a model by excluding the possible causes of demand failures. In subsequent chapters monetary models were investigated, with the conclusion that a number of theoretical difficulties and inconsistencies render automatic adjustment to full employment unlikely even as a logical possibility. Indeed, it is not clear that neoclassical theory has any consistent ‘thought experiment’ to take one from general disequilibrium with unemployment to general equilibrium with full employment (Chapter 8).
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Notes and References
‘Inflation is always and everywhere a monetary phenomenon.’ (Milton Friedman, ‘Inflation: Causes and Consequences’, reprinted in Dollars and Deficits (Englewood Cliffs, NJ: Prentice-Hall, 1968) p. 39.
For example, see Michael Parkin, Macroeconomics (Englewood Cliffs, NJ: Prentice-Hall, 1984) ch. 12, where much is made of this distinction.
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© 1989 John Weeks
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Weeks, J. (1989). Neoclassical Inflation: Aggregate Supply. In: A Critique of Neoclassical Macroeconomics. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-20296-6_12
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DOI: https://doi.org/10.1007/978-1-349-20296-6_12
Publisher Name: Palgrave Macmillan, London
Print ISBN: 978-0-333-49382-3
Online ISBN: 978-1-349-20296-6
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