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Une note sur la règle du taux d’intérêt et le rôle de la courbe LM
[A note on the interest rate rule and the role of LM curve]

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  • Dai, Meixing

Abstract

This note takes part in the debate on the topic “a macroeconomics without LM”. It shows that, when the central bank does not control directly the interest rates on the money and financial markets, LM curve has another role to play than to determine in an endogenous way the money supply when the monetary policy is specified in terms of interest rate rule. In effect, flexible price LM curve makes it possible to specify the expected inflation rate dynamics within an analytical framework generally adopted by the economists defending the idea of abandoning LM in the teaching of the macroeconomics in first cycle.

Suggested Citation

  • Dai, Meixing, 2003. "Une note sur la règle du taux d’intérêt et le rôle de la courbe LM [A note on the interest rate rule and the role of LM curve]," MPRA Paper 13779, University Library of Munich, Germany, revised Mar 2009.
    • Handle: RePEc:pra:mprapa:13779
    as

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    References listed on IDEAS

    as
    1. Robert J. Gordon, 1997. "The Time-Varying NAIRU and Its Implications for Economic Policy," Journal of Economic Perspectives, American Economic Association, vol. 11(1), pages 11-32, Winter.
    2. Pierre-Yves Hénin, 2003. "En finir avec IS-LM ?. Remarque sur une contribution de Gilbert Abraham-Frois," Revue d'économie politique, Dalloz, vol. 113(4), pages 431-434.
    3. Benjamin Friedman, 2003. "The LM Curve: A Not-So-Fond Farewell," NBER Working Papers 10123, National Bureau of Economic Research, Inc.
    4. Gilbert Abraham-Frois, 2003. "Pour en finir avec IS-LM quelques propositions pour simplifier l'enseignement de la macro-économie en premier cycle," Revue d'économie politique, Dalloz, vol. 113(2), pages 155-170.
    5. David H. Romer, 2000. "Keynesian Macroeconomics without the LM Curve," Journal of Economic Perspectives, American Economic Association, vol. 14(2), pages 149-169, Spring.
    6. Meixing Dai & Moïse Sidiropoulos, 2003. "Règle du taux d’intérêt optimale, prix des actions et taux d’inflation anticipé : une étude de la stabilité macroéconomique," Bulletin de l'Observatoire des politiques économiques en Europe, Observatoire des Politiques Économiques en Europe (OPEE), vol. 0(4), pages 115-140, December.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Interest rate rule; flexible price LM curve; monetary policy; expected inflation rate dynamics; macroeconomic stability;
    All these keywords.

    JEL classification:

    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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