National Income and the Price Level: A Study in MacRoeconomic Theory

My intended approach is to build clear and pertinent analytical models starting at the most elementary level, proceeding as rapidly as possible to the point at which they can be applied to the main interesting problems. Although the text departs occasionally from the main line of thought to deal with peripheral questions, it concentrates primarily on the substantive questions that justifiably have attracted the most attention in the fundamental sources. Accordingly, many hypothetical alternatives and problems are omitted entirely, and many others receive only brief treatment, in order to permit greater concentration on the central area of analysis and its applications.PrefaceBailey's exposition is organized around Hicks' famous synthesis of the cash-balance and product markets (here called the "monetary" and "expenditure" sectors respectively). [...] The introduction of the price level brings complications to the two-sector model. [...] This indeterminancy is overcome by the introduction of a third sector-the production and employment sector. [...] The possibility that consistent equilibrium solutions may not be reached is one of the concerns of the third chapter ("Advanced Analysis of National Income Determination"). [...] Real cash balances play an important role in this chapter. Expected changes in such balances help explain inflation. [...] The plausibility of the model and the likelihood of consistent solutions (without government intervention) are both made doubtful by some of the findings of Chapters 7 and 8, ("The Effects of the Rate of Interest and Real Cash Balances on Consumption," and "Measurement and Prediction: An Introduction"). [...] The policy conclusions (Chapter 6, "Policies for Economic Stabilization") follow from the model and from principles of optimum resource allocation. [...] The rest of the book represents the author's attempt to break new ground [...] : the feasibility of disaggregating the model into one of general equilibrium, the availability of a substantial backlog of investment opportunities at low interest rates (Chapter 4, "Some Problems in the Analysis of Equilibrium"); the consistency of imperfect competition with general equilibrium solutions (Chapter 5, "General Equilibrium with Imperfect Competition"); forecasting techniques based on exponentially declining weighted averages of past values (Chapter 9, "Expectations and Adjustment to Change: A Key Link in Cumulative Movements of the Economy"). [...] An appendix on the "Concept of Income" will probably have more interest for the average reader.Jacob Cohen, 1963http://www.jstor.org/stable/pdfplus/1...