Quote:
Originally Posted by rburgh
Adam Smith economics.
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No, it wouldn't be. Smith was arguably the first true economist and sketched the foundations of all that followed; but he merely implied the concept while discussing differences between natural (or equilibrium) price and market price.
Sticky prices are a core concept in Keynesian theory, which holds that wages and prices are slow to adjust to shifts in aggregate demand
and that government, through central banks, spending, and tax policy, should intervene to correct the problem at its root by stimulating or constraining aggregate demand (as the case may be). There are, of course, problems with this approach (particularly in regard to inflation), but it's been the dominant theory for nearly a century now.