tag:blogger.com,1999:blog-325397004329727405.post3910746320823852875..comments2023-09-25T02:14:15.189-04:00Comments on Beyond Microfoundations:: Ashamed to admit it, but...David R. Pughhttp://www.blogger.com/profile/09032073870730301659noreply@blogger.comBlogger3125tag:blogger.com,1999:blog-325397004329727405.post-49739863931409814162011-02-16T07:00:45.620-05:002011-02-16T07:00:45.620-05:00Robert/David,
I don't follow the first of you...Robert/David,<br /><br />I don't follow the first of your objections - the LM curve shows a continuum of equilibria where the stock of money remains constant and velocity of circulation increases with income. I think the conceptual problem is that the flow implied by the LM curve is roughly circular whilst the flow implied by the IS curve is roughly directed (ie from production to consumption), and that the measuring the former is reliant on having measured the latter (it's difficult to imagine an ex ante velocity of money!)<br /><br />I couldn't agree more with your second and third objections though.Robnoreply@blogger.comtag:blogger.com,1999:blog-325397004329727405.post-61088484418199382872011-02-15T16:27:24.253-05:002011-02-15T16:27:24.253-05:00Robert,
Thanks for the pointer. I like the IS/LM...Robert,<br /><br />Thanks for the pointer. I like the IS/LM model. I feel like it gives a very rough but reasonably accurate first approximation of the relationships between major macro-economic aggregates. As I mentioned in the post, I am going to be teaching a version of the IS/LM model to first year undergraduates, so I want to make sure I have a solid understanding of the model's strong and weak points.<br /><br />Any particular alternative that you would suggest that would be teachable to first-year undergraduates? <br /><br />(Big fan of your blog by the way...I am particularly fond of your posts on the problems with General Equilibrium theory).David R. Pughhttps://www.blogger.com/profile/09032073870730301659noreply@blogger.comtag:blogger.com,1999:blog-325397004329727405.post-51838610798312190422011-02-15T16:14:24.340-05:002011-02-15T16:14:24.340-05:00I summarized three objections to the IS/LM model a...I <a href="http://robertvienneau.blogspot.com/2009/04/michal-kalecki-economics-is-science-of.html" rel="nofollow">summarized</a> three objections to the IS/LM model about two years ago.Robert Vienneauhttps://www.blogger.com/profile/00872510108133281526noreply@blogger.com