The Money Multiplier, the Money Market, and the LM Curve
AbstractBy taking into account the procyclical nature of the money multiplier varies procyclically due to the public's portfolio decisions, this note shows that the slope of the LM curve need not be positive but can be of any sign. From this it follows that a fiscal-policy generated shift in the IS curve will have an ambiguous effect on the interest rate and that fiscal policy multipliers will vary in size with the money multiplier.
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Bibliographic InfoArticle provided by Eastern Economic Association in its journal Eastern Economic Journal.
Volume (Year): 20 (1994)
Issue (Month): 3 (Summer)
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Money Multiplier; Money; Multiplier;
Find related papers by JEL classification:
- E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
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