Macroeconomic Dynamics A Marshallian Synthesis

This book presents a general open-ended macrodynamic system as a framework within which a large variety of macrodynamics theories can be set up and compared with one another. It revives a method taken over for macrodynamics by Keynes from Marshall's dynamic theory of relative prices. The variety of particular theories is obtained partly by special assumptions and partly by closing in different ways the open-ended dynamic system. The main concern of the book is with the traditional disequilibrium" macrodynamics - with theories that admit unfulfilled expectations or imperfectly functioning markets as dynamic determinants. But the assumptions of perfect foresight and the universal clearing of markets are also accommodated. While attention is directed mainly to formal relationships, there is also an attempt to place the theories in the history of economic thought. It is sought in particular to demonstrate the significance and the continuing relevance of some heated past controversies, such as the liquidity-preference versus loanable-funds dispute, the dispute over the question of whether the commercial banks can create derivative deposits, and the dispute over conditions under which flexibility of money wages can affect employment." (Publisher)