Keynesian Theory and the Aggregate-Supply/Aggregate-Demand Framework: A Defense

Abstract

This paper defends the Aggregate-Supply/Aggregate-Demand framework against recent criticisms by Barro and others. Using four models - a neoclassical-synthesis Keynesian, a monetarist mark I, a rational expectations/new classical, and a Kaleckian/post-Keynesian - based on this framework, it is shown that it provides an internally-consistent and potentially useful teaching tool, that Keynesian versions of it do follow some of Keynes's ideas, that a Kaleckian/post-Keynesian version is consistent with empirical data, and that the criticisms by Barro and others are unwarranted.

JEL Classification: E10