CONTENTS
Preface = xi
Introduction = 1
1 The basic model = 7
1.1 The essentials of the basic model = 7
1.2 The behavior of firms, households, and government in the basic model = 10
1.2.1 The firms = 10
1.2.2 The households = 11
Mathematical note = 16
1.2.3 Government = 17
1.3 Comparative-statics analysis in the basic model = 18
1.3.1 Market-clearing conditions = 18
1.3.2 The supply and demand for money balances = 22
1.3.3 The effects of exogenous disturbances = 23
Mathematical note = 29
1.4. Dynamic analysis in the basic model = 30
1.4.1 The market process in the basic model = 30
1.4.2 Wage and price adjustment relations = 32
1.4.3 The dynamics of exogenous disturbances = 34
Mathematical note = 36
2 Output and employment under non-market-clearing conditions = 38
2.1 Exchange under non-market-clearing conditions = 38
2.2 The general excess supply case = 41
2.2.1 The behavior of firms under excess supply of commodities = 41
2.2.2 The behavior of households under excess supply of labor services = 45
Mathematical note = 53
2.2.3 The determination of output and employment under general excess supply = 54
2.2.4 The liquidity constraint = 62
2.3 The general excess demand case = 68
2.3.1 The behavior of firms under excess demand for labor services = 68
2.3.2 The behavior of households under excess demand for commodities = 69
Mathematical note = 78
2.3.3 The determination of output and employment under general excess demand = 79
2.4 Output and employment in general = 87
2.4.1 Effective market-clearing loci = 87
2.4.2 Iso-employment loci = 92
2.5 Dynamic analysis in the absence of recontracting = 94
2.5.1 Wage and price adjustment relations = 95
2.5.2 The dynamics of exogenous disturbances = 97
Mathematical note = 99
3 Capital, financial assets, and the rate of return = 101
3.1 The framework for analyzing capital and financial assets = 101
3.2 Capital, financial assets, and the behavior of firms, households, and government = 106
3.2.1 The behavior of firms = 106
3.2.2 The behavior of households : optimal transactions frequency and money holding = 109
3.2.3 The behavior of households : labor supply, consumption demand, and saving = 113
Mathematical note = 118
3.2.4 The behavior of government = 119
3.3 Investment and the rate of return under market-clearing conditions = 120
3.3.1 Market-clearing conditions = 120
3.3.2 Comparative-statics analysis under market-clearing conditions = 124
3.3.3 The effects of fiscal policy = 127
3.3.4 The effects of monetary policy = 130
3.3.5 Growth of the capital stock = 135
3.4 Investment and the rate of return under excess supply of labor services and commodities = 137
3.4.1 The behavior of firms under excess supply of commodities = 137
3.4.2 The behavior of households under excess supply of labor services = 140
Mathematical note = 146
3.4.3 The determination of output, employment and the rate of return under general excess supply = 146
3.4.4 Comparative-statics analysis under general excess supply = 151
4 Inflation and rates of return = 154
4.1 Rates of return and expected rates of price and wage change = 154
4.2 Expected price changes and firm and household behavior = 156
4.2.1 The behavior of firms = 157
4.2.2 The behavior of households : optimal transactions frequency and money holding = 158
4.2.3 The behavior of households : labor supply, consumption demand, and saving = 162
4.3 Comparative-statics effect of expected price changes = 166
4.3.1 Market-clearing conditions = 166
4.3.2 Comparative-statics analysis = 170
Mathematical note = 175
4.4 Dynamic analysis of inflation, expected inflation, and rates of return = 177
4.4.1 Adaptive expectations = 177
4.4.2 The price adjustment relation with expected price changes = 178
4.4.3 Dynamic effects of monetary policy = 179
Mathematical note = 186
5 Inflation and unemployment = 188
5.1 Wage inflation, underemployment, and unemployment in a single labor market = 188
5.1.1 Wage inflation and underemployment = 189
5.1.2 Unemployment = 189
5.2 Wage inflation and unemployment with heterogeneous labor = 191
5.2.1 The rate of average wage inflation = 193
5.2.2 The aggregate level of unemployment = 194
5.3 Asymmetrical wage response = 197
5.4 Gradual adjustment of measured unemployment = 199
5.5 Unemployment, wage inflation, and inflationary expectations = 202
5.5.1 Clockwise cycles and accelerating inflation = 204
5.5.2 The dominant cyclical pattern = 209
6 The dvnamics of aggregate demand = 211
6.1 Gradual adjustment of money balances = 211
Mathematical note = 215
6.2 Gradual adjustment of effective commodity demand = 217
Mathematical note = 221
6.3 Adaptive expectations = 223
6.3.1 Permanent income = 224
6.3.2 The disposition of transitory income = 227
6.3.3 Speculative demand for money = 228
6.4 Gradual clearing of the financial asset market = 230
Mathematical note = 235
7 Output and employment with wage and price speculation = 238
7.1 The framework of wage and price speculation = 238
7.2 Wage and price speculation by households = 239
7.2.1 The employment-acceptance decision = 240
7.2.2 Consumption demand = 243
7.3 The determination of output and employment = 244
7.3.1 Market-clearing conditions = 245
7.3.2 The effect of monetary contraction = 246
7.3.3 Quits and layoffs = 248
7.3.4 The cyclical pattern of real wage rates = 250
7.3.5 The cyclical behavior of consumption and the demand multiplier = 251
7.3.6 The effects of monetary expansion = 252
7.4 Wage and price speculation by firms = 253
7.4.1 Labor demand and output supply = 253
7.4.2 Output and employment = 255
References = 259
Index of names = 264
