Effective Demand in the Short and in the Long Run

2012 ◽  
Author(s):  
Josef Steindl
Keyword(s):  
Effective Demand ◽  
Long Run

scholarly journals On Marshallian theory of demand and short-run equilibrium

2020 ◽  
Author(s):  
William Icefield
Keyword(s):  
Monopolistic Competition ◽  
Effective Demand ◽  
Market Clearing ◽  
Demand Shocks ◽  
Long Run ◽  
Short Run ◽  
Independent Variable ◽  
Demand Effects ◽  
Long Run Equilibrium

Mainstream neoclassical models lack genuine demand effects satisfying the principle of effective demand even with monopolistic competition, without addition of so-called frictions, such as inflexible price. There can only be demand shocks. Price is considered to be an independent variable, instead of quantity. But as Alfred Marshall original envisioned, we can instead think of quantity as an independent variable, along with associated equilibrium convergence via quantity adjustments. This allows us to consider a short-run market-clearing equilibrium with less demand than a long-run equilibrium, in contrast to mainstream models without frictions and shocks, with validation of the principle of effective demand.

scholarly journals Egalitarian Policies and Effective Demand: Considering Balance of Payments (Note 1)

2017 ◽  
Vol 5 (2) ◽  
pp. 89
Author(s):  
Taro Abe
Keyword(s):  
Balance Of Payments ◽  
Capital Movement ◽  
Effective Demand ◽  
Unemployment Compensation ◽  
Long Run ◽  
Short Run

<em>This study examines the effectiveness of redistribution policies considering balance of payments. Unlike </em><em>Bowles (2012) and Abe (2015, 2016), we assume that capital movement is sluggish to consider the </em><em>short-run effects. Results indicate that conventional egalitarian policies such as increasing </em><em>unemployment compensation and strengthening dismissal regulations can be effective, whereas an </em><em>asset-based redistribution such as a decrease in the ratio of monitoring labor cannot be. These results </em><em>contradict Bowles (2012). We need to reevaluate conventional egalitarian policies if the effects of </em><em>effective demand and adjustment of capital continue in the long run.</em>

scholarly journals Keynes und seine Interpreten

2001 ◽  
Vol 31 (123) ◽  
pp. 203-225 ◽  
Author(s):  
Hansjörg Herr
Keyword(s):  
Effective Demand ◽  
Subjective Expectations ◽  
Long Run ◽  
Economic Paradigm ◽  
Short Run

Keynes started to develop a new economic paradigm that is different form the classical and neoclassical school. He stressed the role of effective demand, money, uncertainty and subjective expectations. Only the postkeynesian interpretation of Keynes follows the original ideas of Keynes. The IS-LM-model together with the neoclassical syntheses, the neokeynesian and the newkeynesian models reduce Keynes to short-run disturbances of the long-run neoclassical equilibrium.

Economic growth and the growth of effective demand

2019 ◽  
pp. 149-161
Author(s):  
Kazimierz Łaski
Keyword(s):  
Business Cycles ◽  
Raw Materials ◽  
National Income ◽  
Production Capacity ◽  
Productive Capacity ◽  
Effective Demand ◽  
Long Run ◽  
Additional Demand ◽  
Skilled Workforce ◽  
The Moment

With an adequately skilled workforce and a sufficient supply of raw materials and energy, it is investment that allows national income and employment to grow. However, this growth is only potential. If it is to materialize, then effective demand has to expand in step with production capacity. To analyze this growth it is necessary to distinguish between actual investment that creates productive capacity this year, and investment decisions that will result in productive capacity in the future. As investment takes place, additional demand raises output and employment. However, as productive capacity expands, it brings forward the moment when demand starts to lag behind the growth of capacity, and excess capacity starts to depress investment. This causes business cycles. In the long run technological change will affect the trend of growth through successive business cycles.

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