Effective Demand and Sectoral Balances

• Let's try to put Keynes' theory of Effective Demand into Sectoral Balances framework

        (S - I)     + (T - G)       + (M - X)    ≡ 0

• For time being, assume both government sector and foreign sector are stable

        (S - I)     + (T - G)       + (M - X)    ≡ 0

        ???           Stable          Stable       Unchanging (by definition)

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