Benavie, Arthur
January 1977
Southern Economic Journal;Jan77, Vol. 43 Issue 3, p1218
Academic Journal
It is our purpose in this paper to argue that both the Neoclassical and the Keynesian models have defects which may render them inappropriate as analytical tools for analyzing short-run macro behavior.
In this paper, we generalize both models as instruments for analyzing the short-run. We do this by reformulating the firms constrained maximization process; specifically we assume that the firm maximizes profits subject to its production function with respect to average labor and capital utilized over the time-period, rather than with respect to beginning-period utilized labor and capital. The upshot is that the stock demand for capital is an average stock demand for the period, rather than a beginning-period stock demand (as in the Neoclassical model).


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