Intermediate Macroeconomics without the IS-LM Model
AbstractThe IS-LM model is the primary model of economic fluctuations taught in intermediate-level undergraduate macroeconomics. Recent works by Taylor and Romer make a strong case for an alternative model, known as the aggregate demand-price adjustment (AD-PA) or the aggregate demand-inflation adjustment (AD-IA) model, as a better model of economic fluctuations. The author argues that the AD-PA model is superior to the IS-LM model for teaching about economic fluctuations in intermediate macroeconomics. He compares the perfomance of the two models in teaching about two important issues in current macroeconomics: the ineffectiveness of monetary policy in stimulating the 1990s Japanese economy and the rapid switch of the U.S. Federal Reserve from contractionary policy to expansionary policy in 2001.
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Bibliographic InfoArticle provided by Taylor and Francis Journals in its journal The Journal of Economic Education.
Volume (Year): 34 (2003)
Issue (Month): 3 (January)
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- Peter Bofinger & Eric Mayer & Timo Wollmersh�user, 2009.
"Teaching New Keynesian Open Economy Macroeconomics at the Intermediate Level,"
Journal of Economic Education,
Taylor and Francis Journals, vol. 40(1), pages 80-102, January.
- Bofinger, Peter & Mayer, Eric & Wollmershäuser, Timo, 2006. "Teaching New Keynesian Open Economy Macroeconomics at the Intermediate Level," W.E.P. - WÃ¼rzburg Economic Papers 66, University of Würzburg, Chair for Monetary Policy and International Economics.
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