Saturday, July 18, 2015

Sticky notes

Scott Sumner:

The entire AS/AD model makes no sense without some form of wage or price stickiness. We generally assume wages and prices are sticky in terms of the medium of account.

Roger Farmer:

Leijonhufvud pointed out that the assumption that The General Theory is about sticky prices is central to this orthodox interpretation of Keynesian economics, but it is not a central argument of the text of The General Theory.

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