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ERIC Number: EJ767247
Record Type: Journal
Publication Date: 2007
Pages: 15
Abstractor: Author
ISBN: N/A
ISSN: ISSN-0022-0485
EISSN: N/A
To Save or to Consume: Linking Growth Theory with the Keynesian Model
Kwok, Yun-kwong
Journal of Economic Education, v38 n1 p109-123 Win 2007
In the neoclassical growth theory, higher saving rate gives rise to higher output per capita. However, in the Keynesian model, higher saving rate causes lower consumption, which may lead to a recession. Students may ask, "Should we save or should we consume?" In most of the macroeconomics textbooks, economic growth and Keynesian economics are in separate, sometimes unsequential, chapters. The connection between the short run and the long run is not apparent. The author builds a bridge between the neoclassical growth theory and the Keynesian model. He links the Solow diagram and the IS-LM curves and depicts the short-run to long-run transition of the economy after changes in saving and other macroeconomic policies. (Contains 4 figures and 9 endnotes.)
Heldref Publications. 1319 Eighteenth Street NW, Washington, DC 20036-1802. Tel: 800-365-9753; Tel: 202-296-6267; Fax: 202-293-6130; e-mail: subscribe@heldref.org; Web site: http://www.heldref.org
Publication Type: Journal Articles; Reports - Descriptive
Education Level: Higher Education
Audience: N/A
Language: English
Sponsor: N/A
Authoring Institution: N/A
Grant or Contract Numbers: N/A