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Matt wrote, concerning skepticism about a negatively-sloped AD schedule, 
 
>Are these counter-arguments sound? Are there others?  Why don't the  
>textbooks include these? 
 
For the best and clearest argument that AD may sometimes be upward-sloping, see Tobin's
*Asset Accumulation and Economic Activity.*  Another essential piece is Summers and
Delong's  article, the cite for which I am having trouble locating, called something like,
"Are falling prices stabilizing?" Tobin's argument partly turns on the increasing real
value of debt, leading to redistribution toward lower spending creditor and bankruptcies;
and on the idea that falls in  prices lead to expectations of deflation, raising real
interest rates. Summers and Delong is an excellent empirical piece, answering the question
in the title negatively for the 20th century US economy.
 
Kevin Quinn 
Bowling Green State University 
 
 
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