Saturday, May 23, 2015

Two, not of the same kind

Sumner says "There is no such thing as 'global aggregate demand'".

He doesn't say global aggregate demand cannot be measured. He says there isn't any.

That's idiotic.

Sumner also said "Aggregate demand is fundamentally a monetary concept". That's interesting. Keynes complained that "The National Dividend, as defined by Marshall and Professor Pigou, measures the volume of current output or real income and not the value of output or money-income." So, Sumner is child of Keynes on this point: Keynes said we ought to consider nominal demand, and Sumner does.

Keynes also pointed out that "the community’s output of goods and services is a non-homogeneous complex which cannot be measured ... except in certain special cases".

But he didn't say there isn't any.

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