Patterns of sustainable specialization and trade

Type: Reports Written by Arnold Kling | Friday 3 February 2012

Adam Smith and David Ricardo explained the benefits of trade, based on specialization and comparative advantage. These concepts, says Arnold Kling, also can provide the basis for explaining fluctuations in employment. In this paper Kling proposes that we jettison the Keynesian paradigm of aggregate supply and demand (AS-AD) in favor of an alternative paradigm, which he calls patterns of sustainable specialization and trade (PSST).