Deconstructing the Macroeconomics' IS-LM model: its assumtions and simplifications
Vergès, Joaquim (Universitat Autònoma de Barcelona)
Universitat Autònoma de Barcelona. INCERS

Data:	2023
Descripció:	20 pag.
Resum:	The IS-LM model emerges from the academic impact of Keynes' General Theory of Employment, Interest and Money (GT). It was developed afterwards, in the late 1930s, starting to be called the Hicks-Hansen model; though other academics such as Harrod and Mead contributed to it. In this regard, the model consisted of a way of mathematising the core of Keynes' GT (though Keynes did not recognise it as such); it was fully developed and consolidated as the academic new paradigm across the 1950s and 1960s. However, it was not (and is not) properly considered as a formalisation of the GT but as an independent development inspired by it. A compromise distinction in this regard has become generally accepted: the label 'economics of Keynes' for referring to his GT and derived developments, and 'Keynesian economics' for the IS-LM construct and its derivatives . With its double equilibrium (Investment=Savings; Money Supply=Demand for Liquidity), the model sort of plays in standard Macroeconomics a parallel role to that of the 'General-Equilibrium-of-competitive-markets' in Economics/Microeconomics. This IS-LM model remains either as fundamental or is simply present in most popular mainstream macroeconomic manuals, as well as those of economic policy ‒especially monetary policy‒ texts.
Drets:	Aquest document està subjecte a una llicència d'ús Creative Commons. Es permet la reproducció total o parcial, la comunicació pública de l'obra i la creació d'obres derivades, sempre que no sigui amb finalitats comercials i que es distribueixin sota la mateixa llicència que regula l'obra original. Cal que es reconegui l'autoria de l'obra original.
Llengua:	Anglès
Document:	Working paper
Matèria:	Explanatory models in Economics ; Post-Keynesian Economics ; Macroeconomics teaching ; JEL codes: B22, E12, E20, E40

20 p, 2.1 MB

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