Abstract
There are two prominent theoretical perspectives on the determination of aggregate output: The general equilibrium perspective and the reactive, circular flow perspective that relates economic activity instigating further activity. The former replaced the latter as the dominant view within macroeconomics over 30 years ago, but the lack of general equilibrium models (i.e., dynamic stochastic general equilibrium models) suitable for undergraduates has kept such models out of the undergraduate curriculum. This paper presents a model that captures both narratives within the same model environment that makes their fundamental theoretical differences manifestly clear in a way that is accessible to undergraduates.
Recommended Citation
(2026)
"Advancing the Introduction to Both Narratives of Aggregate Output: A New Model,"
Journal of Economics and Finance Education: Vol. 21:
Iss.
2, Article 4.
Available at:
https://scholarship.rollins.edu/jefe/vol21/iss2/4
