Abstract
A shifting equilibrium model of effective demand is constructed, in which the state of long run expectations is non‐constant, and is affected by the disappointment of short‐run expectations. It is shown that this model gives rise to cumulative expansions/contractions in nominal income. Changes in the financial fragility of households and firms in the course of these expansions/contractions are then allowed for, together with commercial bank reactions to changing financial fragility. It is shown that turning points in the expansions/contractions of nominal income can arise, resulting in a model of aggregate fluctuations in which the business cycle is aperiodic and of no fixed amplitude.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
