Abstract
This note shows that much conventional macro‐economic literature uses two inconsistent definitions of equilibrium in the commodity market. Equilibrium is defined as income equalling expenditure when deriving the IS curve; but when overall equilibrium is treated the requirement for equilibrium is that planned supply equals planned demand. The note shows that these inconsistent definitions lead to a confusing and often erroneous exposition of disequilibrium behaviour.
Citation
Demery, L. and Phelps, M. (1980), "Macro‐economics and Equilibrium in the Commodity Market", Journal of Economic Studies, Vol. 7 No. 3, pp. 179-187. https://doi.org/10.1108/eb002518
Publisher
:MCB UP Ltd
Copyright © 1980, MCB UP Limited