Document Type
Discussion Paper
Publication Date
8-1-1977
CFDP Number
461
CFDP Pages
32
Abstract
There is a considerable tension in neoKeynesian macroeconomics as to whether the familiar IS-LM analysis should be interpreted as a description of equilibrium or disequilibrium. The present paper shows how the IS-LM model can be used for either purpose. The first section provides the preliminaries for the model of disequilibrium behavior that I will use. The second section lays out the sectoral notional and effective demands. The third section gives the equilibrium solution while the fourth and fifth sections give excess supply and excess demand solutions respectively.
Recommended Citation
Smith, Gary, "Equilibrium and Disequilibrium Interpretations of the IS-LM Model" (1977). Cowles Foundation Discussion Papers. 693.
https://elischolar.library.yale.edu/cowles-discussion-paper-series/693