To save or to consume: linking growth theory with the Keynesian model

Kwok, Yun-kwong 2007, To save or to consume: linking growth theory with the Keynesian model, Journal of economic education, vol. 38, no. 1, Winter, pp. 109-122.

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Title To save or to consume: linking growth theory with the Keynesian model
Author(s) Kwok, Yun-kwong
Journal name Journal of economic education
Volume number 38
Issue number 1
Season Winter
Start page 109
End page 122
Publisher Heldref Publications
Place of publication Washington, DC
Publication date 2007
ISSN 0022-0485
Keyword(s) Keynesian model
medium-run adjustment
neoclassical growth theory JEL codes: A2, E1, E2, O4
Summary 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.
Language eng
Field of Research 140102 Macroeconomic Theory
HERDC Research category C1 Refereed article in a scholarly journal
Copyright notice ©2007, Heldref Publications
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Document type: Journal Article
Collections: Faculty of Business and Law
School of Accounting, Economics and Finance
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