Effect of Monetary Intervention in the Frame of IS-LM Model with Dynamic Price Adjustment and Adaptive Expectations
AbstractAn assumption that a central bank can influence the real interest rates is the object of our interest. In the paper we form and solve a model which corresponds to Romer´s (2000) assumptions. Our model is IS-LM augmented by a conception of price-adjusting after monetary intervention and inflation expectations. A monetary policy rule is derived from the model. Moreover, it offers a demonstration of economic behaviour by different economic assumptions of different economic schools, similar to one in the book of Heijdra (2002).
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Bibliographic InfoArticle provided by University of Economics, Prague in its journal Politická ekonomie.
Volume (Year): 2011 (2011)
Issue (Month): 1 ()
Postal: Redakce Politické ekonomie, Vysoká škola ekonomická, nám. W. Churchilla 4, 130 67 Praha 3
Find related papers by JEL classification:
- B41 - Schools of Economic Thought and Methodology - - Economic Methodology - - - Economic Methodology
- C30 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - General
- E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
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- repec:ebl:ecbull:v:15:y:2005:i:5:p:1-10 is not listed on IDEAS
- David H. Romer, 2000.
"Keynesian Macroeconomics without the LM Curve,"
Journal of Economic Perspectives,
American Economic Association, vol. 14(2), pages 149-169, Spring.
- Alessandro Vercelli, 1999. "The evolution of IS-LM models: empirical evidence and theoretical presuppositions," Journal of Economic Methodology, Taylor and Francis Journals, vol. 6(2), pages 199-219.
- Taylor, John B., 1993. "Discretion versus policy rules in practice," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 39(1), pages 195-214, December.
- Kydland, Finn E & Prescott, Edward C, 1977. "Rules Rather Than Discretion: The Inconsistency of Optimal Plans," Journal of Political Economy, University of Chicago Press, vol. 85(3), pages 473-91, June.
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