Tony Brewer wrote: 
>If a bubble
>bursts when expectations turn sour it can affect aggregate demand, for
>example because individual shareholders who previously regarded their
>holdings as sufficient, say for retirement, are now (really) poorer
>(individually) in terms of the purchasing power of their holdings, and
>decide to cut back on spending. Such an individual need not have intended
>to sell the shares immediately - what changes is their expectation of
>future prices. 
 

Isn't this known as the wealth effect and is standard part of intro textbooks? I know of no counter-arguments to this. The recent increases in real estate values n the U. S. are supposed to have had the same effect on spending, through more home equity loans.
 
What I am finding missing in the original post is the distinction between money supply and credit for investment purposes. If the Schumpeterian entrepreneurs borrow money to create new businesses, the amount of credit grows and can increase aggregate demand (accepting the multiplier effect), but can hardly be called a monetary phenomenon in a meaningful sense.  The AD curve will shift. Whether it is considered exogenous or not, depends on how one views the process of innovation itself. Schumpeter would have considered it endogenous in a sociological sense, but not so in his economic analysis. The entrepreneurial activity was for him a disequilibrating force.
 
In his _The Theory of Economic Development_  Schumpeter writes:
 
"It is always a question of, not of transforming purchasing power which already exists in someone's possession, but of creation of new purchasing power out of nothing even if the credit contract by which the new purchasing power is created is supported by securities which are not themselves circulating media - which is added to the existing circulation. And this is the source from which new combinations *are* often financed, and from which they would have to be financed *always*, if results of pervious development did not exist at the moment " (p. 73, Transaction Publishers, emphases in the original).
 
On the next page Schumpeter refers to the banker as the *ephor* of the exchange economy (emphasis added).
 
Sumitra Shah