Walrasian, Non-Walrasian and Post-Walrasian Perspectives on the ADAS Model: Theoretical and Pedagogical Implications

Abstract

There is now a considerable professional literature focused on the logical and methodological problems of the “traditional” aggregate demand and aggregate supply (ADAS) model. The literature argues that both demand and supply behavior are embedded in the aggregate demand curve, as derived from the ISLM analysis; consequently, the aggregate demand curve is not a demand curve as commonly understood by economists. Exacerbating this problem is that the supply behavior underlying this aggregate demand curve is often inconsistent with the supply behavior used to derive the corresponding aggregate supply curve; Fields and Hart (1990, p.678). One result of this inconsistent behavior is two different levels of income and supply at each disequilibrium price level.