User:Annes Sokrates

Distinction between short (SR) and long (LR) runs in macroeconomics

 * Variables placed in a hierarchy of speeds of adjustment: e.g. employment changes in the SR, capital changes in the LR
 * Think of business cycles in the SR (demand side) and a growth-trend in the LR (supply side)
 * In the SR: not all variables have adjusted to an equilibrium, in the LR: all variables have adjusted to an equilibrium
 * Neoclassical monetarist: prices adjust faster than quantities, Keynesian: quantities adjust fast to prices
 * LR and SR are independent to each other. The LR-equilibrium itself is unaffected by what happens in the SR

Harrod and Domar Model (1939)

 * Tried to analyse business cycles and growth together, but it was unsuccessful
 * Operational starting point on the development and growht model (Solow)
 * Two theoretical elements
 * 1) Multiplier Effect
 * 2) Accelerator Principle