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Cambridge Journal of Economics Advance Access published online on August 28, 2009
Cambridge Journal of Economics, doi:10.1093/cje/bep052
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© The Author 2009. Published by Oxford University Press on behalf of the Cambridge Political Economy Society. All rights reserved.

Comment: The nature of the ADAS model based on the ISLM model

Derick Boyd*

* University of East London, UK. I am grateful to Professors Philip Arestis, John Driffill and Ron Smith for suggestions and comments

Address for correspondence: University of East London, University Way, Docklands Campus, London E16 2RD UK; email: d.a.c.boyd{at}uel.ac.uk

Rao suggests that the Rowan demand curve does not exist but that result is obtained through treating the system as a simultaneous equation problem that will inevitably obtain the standard aggregate demand (AD) result. The Rowan procedure is a conditional function that makes planned AD conditional on planned aggregate supply (AS)—a quintessential Keynesian process. This results in an AS-dependent AD curve that is upward sloping. This system can be shown to be stable, have a firm connection to measures of national income accounting without dependence on notions of equilibrium and implications for econometric estimations.

Key Words: Keynesian and neo-Classical model • Aggregate demand and supply

JEL classifications: E00, E10, E12

Manuscript received April 8, 2009; final version received August 14, 2009.


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