Macroeconomic Hydraulics Reconsidered: Teaching Leakages and Injections from the Classical Perspective
Document Type
Article
Publication Date
Summer 2011
Abstract
This paper offers a pedagogical alternative to the familiar Keynesian analysis of leakages and injections based on the Classical school. In doing so, the paper posits that the Classical analysis provides a mirror image of the Keynesian approach, i.e., where the flows constituting leakages in the Keynesian system are analogous to injections in the Classical school. Furthermore, the paper shows that a disequilibrium situation in the bond market causes bond prices to move in a direction precisely opposite that of real gross domestic product when a similar goods market disequilibrium occur.
Publication Information
Kyer, Ben L. and Maggs, Gary E. (2011). "Macroeconomic Hydraulics Reconsidered: Teaching Leakages and Injections from the Classical Perspective." JOURNAL OF ECONOMICS AND FINANCE EDUCATION 10.1, 14-18.
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