The aggregate demand (AD)/aggregate supply (AS) framework as presented in almost all textbooks is logically inconsistent, because it seperates the demand side from the supply side. Due the the circular flow nature of the macroeconomic process, however, production/supply and income/demand cannot...

This paper analyses the dynamic interaction between profit maximization and aggregate demand through two alternative theories of price and output adjustment. According to the neoclassical interpretation, excess aggregate demand drives up price, which in turn reduces the real wage rate to induce...

The author intends to prove that economic policy in Germany after 1979 was opposed to that recommended by Kalecki in his famous 'Three ways to Full Employment' and was responsible for the surge in unemployment. Part I of the paper sketches the theoretical background of Kalecki's recommendations....

In a simplified model GDP growth depends on the demand effect of private investment growth and on the growth of the private savings ratio. In a generalized model private investment (IP) has to be supplemented by the trade balance (E) and the budget deficit (D), their sum being termed NPCE...

The very basis of macroeconomics is the circular flow of expenditures and incomes. From this follows the conclusion that it is demand which determines supply and not vice versa. The most paradoxical result of this approach is the hypothesis that investment finances itself by quantity adjustment,...

Growth of aggregate demand at any given private saving rate depends on growth of private investment, export surplus and budget deficit. Slower growth of private investment in the mid-1970s has triggered stagnation trends in Europe's developed economies, caused mainly by inadequate aggregate...

The paper starts with examining the standard concept of government expenditure multiplier and finds that in a model of open economy with government revenues and expenditures the multiplier definition is incorrect in so far as the import intensity component relates total imports to GDP, whereas...

Abstract Keynes and Kalecki both assume that private investment determines (but is not determined by) private savings. For Keynes, the desired level of saving is an increasing function of GDP, somehow related to the psychology of the society; 'autonomous' shifts of investment are determined by...

Sustainable growth in catching-up countries requires the widening of the foreign trade bottleneck. It is however not clear whether two prescriptions aiming at solving this problem greater exchange rate flexibility and the liberalization of the capital market, are in reality not contradictory....