ABSTRACT
In this chapter 1 we present the analysis of an empirically oriented baseline model of disequilibrium aggregate demand–disequilibrium aggregate supply (DAD– DAS) type. 2 Its origins as far as the considered wage–price spiral is concerned date back to the chapter of Chiarella and Flaschel (1996b). This wage–price mechanism has recently been extended and studied analytically and numerically in Chiarella et al. (2005) in great detail. The results we obtain in the present chapter from this wage–price mechanism, augmented by a (partly) conventional Keynesian goods market dynamics, Okun’s law and a conventional type of Taylor interest rate policy rule, stand in striking contrast – despite formal similarities – to the ones obtained from the comparable new Keynesian macrodynamics when staggered wage and price setting are assumed in this latter approach.
