Abstract
Mainstream economics deals with allocation and income distribution in neoclassical fashion, while the macro-economics of underspending and overspending are handled in a neo-Keynesian spirit. The question is whether this type of eclectic synthesis can be reproached for being inconsistent. The author tries to answer this question for a situation of low investment, low profits, low employment, unused capacity and a wage-price spiral. He argues that, though some elements of the neo-classical allocation and distribution theory are lost, the main neo-classical body can cope with situations of underspending. However, not without limits. Outside a ‘corridor’ a la Leijonhufvud, situations may arise where the eclectic synthesis may fail. The author enumerates ten factors determining the boundaries of such a corridor.
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.
