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The O-ring theory of economic development is a model of economic development put forward by Michael Kremer in 1993, [1] which proposes that tasks of production must be executed proficiently together in order for any of them to be of high value. The key feature of this model is positive assortative matching, whereby people with similar skill ...
The Keynesian cross diagram is a formulation of the central ideas in Keynes' General Theory of Employment, Interest and Money.It first appeared as a central component of macroeconomic theory as it was taught by Paul Samuelson in his textbook, Economics: An Introductory Analysis.
An economic model is a theoretical construct representing economic processes by a set of variables and a set of logical and/or quantitative relationships between them. The economic model is a simplified, often mathematical, framework designed to illustrate complex processes.
The Phillips curve is an economic model, named after Bill Phillips, that correlates reduced unemployment with increasing wages in an economy. [1] While Phillips did not directly link employment and inflation , this was a trivial deduction from his statistical findings.
The cobweb model is generally based on a time lag between supply and demand decisions. Agricultural markets are a context where the cobweb model might apply, since there is a lag between planting and harvesting (Kaldor, 1934, p. 133–134 gives two agricultural examples: rubber and corn). Suppose for example that as a result of unexpectedly bad ...
Aggregate supply/demand graph. The AD–AS or aggregate demand–aggregate supply model (also known as the aggregate supply–aggregate demand or AS–AD model) is a widely used macroeconomic model that explains short-run and long-run economic changes through the relationship of aggregate demand (AD) and aggregate supply (AS) in a diagram.
In economics, an input–output model is a quantitative economic model that represents the interdependencies between different sectors of a national economy or different regional economies. [1] Wassily Leontief (1906–1999) is credited with developing this type of analysis and earned the Nobel Prize in Economics for his development of this model.
Important contributions to the model came from the work done by Solow and by Swan in 1956, who independently developed relatively simple growth models. [2] [3] Solow's model fitted available data on US economic growth with some success. [6] In 1987 Solow was awarded the Nobel Prize in Economics for his work. Today, economists use Solow's ...