Time Dimension Missing in Macroeconomic Models
One of the magic words of Cambridge macroeconomics is the “short run.” Somehow, the term sweeps all the periods, short or long, under the rug of “moment” (T 0 in the time dimension). No wonder all “real quantities” are defined with no regard whatsoever to “period.” Let us come all the way back to the classical framework of “the market.” One of the first things we do is to define and confine the accounting period. Otherwise, we would never be able to name the “quantity traded” or the “equilibrium price.” To be meaningful, we say for instance that the quantity ( q ) of apples traded was 10,000 natural units at the average price ( p ) of half a dolla r, over the past week (T -1 , negative dimension for the purpose of accounting only). Apparently, no period, no quantity, no price, no market! Now in Cambridge macroeconomics: Is there a way t...